Buy-and-sell Agreement
Definition of "Buy-and-sell agreement"
Approach used for sole proprietorships, partnerships, and close corporations in which the business interests of a deceased or disabled proprietor, partner, or shareholder are sold according to a predetermined formula to the remaining members) of the business. For example, a partnership has three principals. Upon the death of one, the two survivors have agreed to purchase, and the deceased partner's estate has agreed to sell, the interest of that partner according to a predetermined formula for valuing the partnership to the survivors. Funds for buying out the deceased partner's interest are usually provided by life insurance policies, with each partner purchasing a policy on the other partners. Each is the owner and beneficiary of the policies purchased on the other partners. When a sole proprietor dies, usually a key employee is the buyer/successor. The sole proprietorship, partnership, and close corporation under the entity plan can buy and own life insurance policies on the proprietor, partner, or shareholder and achieve the same result as when an individual buys and owns the policies.
Popular Insurance Terms
Maximum limit of liability of an insurance company for a particular claim or kind of loss that is applicable in general to all such claims or losses. This maximum limit of liability is ...
Record prepared by the rating bureau describing the particulars of an insured property and the applicable premium rate. ...
Statutory law that lowers the defendant's liability by restricting the monetary recovery of the plaintiff incurring a specified injury, such as pain and suffering, or by restricting the ...
Company in which shareholders limit their liability exposure to their percentage of ownership or equity interest in the company. Shareholders' personal assets are protected in the event of ...
Federal legislation requiring employers with traditional health plans to also provide an HMO to its employees. The act also makes it mandatory for employers to contribute as much to the HMO ...
Costs associated with the selling of a new insurance policy to a policyholder. The costs include the acquisition commission as a percentage of the first year's premium, underwriting ...
Coverage that can be converted into permanent insurance regardless of an insured's physical condition and without a medical examination. The individual cannot be denied coverage or charged ...
What is SSDI? It is a form of financial aid for people living with a disability that impacts their quality of life. As one of the largest Federal programs designed to provide assistance to ...
Same as term: Beneficiary; Beneficiary Clause: ...
Have a question or comment?
We're here to help.