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
Same as term Adjuster: individual employed by a property and casualty insurance company to settle on its behalf claims brought by insureds. The adjuster evaluates the merits of each claim ...
Includes rate of return, how long the annuity's interest rate is guaranteed, loads (front, middle and back), financial ranking of the insurance company offering the annuity, the monthly ...
Denial of coverage for damage, in inland marine insurance, stemming from routine use of the property. Property can be expected to deteriorate somewhat over time from normal use. This is not ...
Legal right of a passenger in an automobile involved in an accident to bring a liability suit against the driver. It is deemed that a special standard of care is owed by an automobile ...
Element used to adjust losses to reflect the incurred but not reported claim (IBNR) under the retrospective method of rating. ...
Coverage by at least two insurance policies providing the same coverage for the same risk. ...
Division of a sum of money between a deferred annuity and an immediate life annuity certain. ...
In property insurance policy, clause that stipulates that if legislative acts or acts of the insurance commissioner's office expand the coverage of an insurance policy or endorsement forms ...
Section of some inland marine insurance {transportation insurance) and many other property insurance policies excluding coverage for damage to shipped goods by vermin such as rats. ...
Have a question or comment?
We're here to help.