Question

With three partners in a business, how many life insurance policies would be required to insure a cross-purchase buy-sell plan?

A) 9.
B) 12.
C) 3.
D) 6.

Answer 1

In a cross-purchase buy-sell plan, each partner needs to have two life insurance policies - one for themselves and one for each of the other partners. Therefore, there would be 6 life insurance policies required for a cross-purchase buy-sell plan with three partners.

Step-by-step explanation:

In a cross-purchase buy-sell plan, each partner purchases a life insurance policy on all other partners. So, with three partners, each partner needs to have two life insurance policies - one for themselves and one for each of the other partners.

Therefore, in total, there would be 6 life insurance policies required to insure a cross-purchase buy-sell plan with three partners.