An agreement that provides that upon a business owner's death, surviving owners will purchase the deceased's interest, often with funds from life insurance policies owned by each principal on the lives of all other principals is the:

The correct choice is the buy-sell plan, which is a strategic agreement among business partners or owners. This plan outlines the process that will be followed in the event of an owner's death, disability, or retirement, specifically regarding how the deceased or departing owner’s interest in the business will be handled.

In a buy-sell plan, the surviving owners agree to purchase the deceased owner's share of the business, which is often funded through life insurance policies that each partner holds on the others. This mechanism ensures that the financial resources needed to execute the purchase are readily available at the time when the buyout occurs, providing liquidity to the deceased owner’s estate and securing the business's continuity among the remaining partners.

The significance of this plan lies in its ability to prevent potential disputes among heirs who might not share the same vision for the business or who may not possess the necessary background in operating it. Thus, the buy-sell plan serves as a crucial risk management tool for businesses, ensuring smooth transitions and maintaining stability during unexpected changes.

Other options, while they may involve aspects of ownership transfer or business continuity, do not specifically encompass the structured and life insurance-backed agreement that a buy-sell plan defines. An inheritance agreement typically deals with how assets are distributed upon death