Ace the Chartered Life Underwriter Challenge 2025 – Secure Your Success and Dominate the Exam!

The primary purpose of a "buy-sell agreement" is to manage how business interests are handled upon an owner’s death or disability. This legal contract ensures that remaining owners or the business itself can buy the interest of a deceased or disabled owner, facilitating a smooth transition and preventing disruption in the company's operations. By having a clear plan in place, the buy-sell agreement protects both the business and the owners' families financially, providing a predetermined method for valuing the business and establishing the terms of the sale. This preparation helps to avoid conflicts and confusion during an emotionally challenging time, ensuring that the owner's wishes are honored and that the business can continue to operate effectively.

The other options do not accurately represent the primary focus of a buy-sell agreement. Combining resources for more insurance is not the essence of this agreement, as it specifically deals with ownership transitions. Establishing personal insurance benefits for employees and reducing the number of owners in a business are unrelated objectives, as the buy-sell agreement is concerned with ownership transfer rather than employee benefits.