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
Medical malpractice that is the legal responsibility of a person or organization not in the medical profession or business. It is usually covered under a professional liability insurance ...
Sum of money paid on the principal amount of money invested or loaned. ...
Type of coverage of property owned by one person at several locations, including merchandise, materials, fixtures, furniture, specified machinery, betterments, and improvements made by ...
Loss of income resulting from the damage or destruction of a person's property or a business's property. For example, if a store is damaged by fire and is unable to sell its inventory to ...
Time frame during which an annuitant makes premium payments to an insurance company. The obligations of the company to the annuitant during this period depend on whether a pure annuity or ...
Rejection by an insurance company of an application for a policy. ...
Legislation that provided temporary rules for implementing the employee retirement income security act of 1974 (erisa). ...
Coverage for small groups that cannot meet the underwriting standards of true group insurance. Even though the franchise insurance covers an entire group, individual policies are written on ...
HEALTH MAINTENANCE ORGANIZATION that restricts to a relatively small amount the number of medical providers from which an HMO member may seek services. Usually, HMO members may select the ...
Have a question or comment?
We're here to help.