California Insurance License Exam Practice Test Practice Question
How can partners guarantee a market for their share of the business in the event of death?
Correct Answer: A
Rationale: Partners can ensure a market for their share of the business upon death through buy-sell agreements. These legally binding contracts stipulate how a deceased partner's interest will be sold, often to remaining partners, ensuring continuity and financial stability.
Key person insurance (B) provides funds to the business upon the death of a crucial member but does not directly facilitate the sale of their ownership. Split dollar insurance (C) is a method of sharing life insurance benefits, not a mechanism for transferring ownership. Deferred compensation agreements (D) focus on future payments to employees, lacking provisions for ownership transfer after death.
Unlock All Questions
Subscribe to Premium for full access to all practice questions, detailed rationales, and performance tracking.
Subscribe Now