Three individuals form a partnership with equal shares valued at $300,000. If they were persuaded to use an "entity" buy-sell plan funded with life insurance, how many policies and for what amounts would be purchased?

In an "entity" buy-sell plan, the partnership would purchase life insurance policy on the lives of each of the three partners. The amount of the life insurance policy purchased would be $300,000 times three (3) for a total of $900,000 worth of life insurance. In this scenario, each partner would have a separate policy for $300,000. In the event of the death of any of the three partners, the remaining two partners would receive the proceeds from the deceased partner's policy. The proceeds would then be used to buy out the share of the deceased partner from the business.