Close Corporation Plan

AAA

DEFINITION of 'Close Corporation Plan'

A form of business buy-sell agreement. Close Corporation Plans stipulate that the surviving partners must purchase all of the shares owned by the deceased partner or owner. The plan outlines the method of funding as well as the price at which the shares must be purchased.

INVESTOPEDIA EXPLAINS 'Close Corporation Plan'

Close Corporation Plans are usually funded with life insurance policies. They usually take one of two basic forms. One is a cross-purchase agreement, where each partner owns a policy on all of the others, and the other is known as an stock redemption plan, where the corporation owns a single policy on each stockholder.

RELATED TERMS
  1. Alien Corporation

    A corporation that was created in another country. Alien corporations ...
  2. Business Continuation Insurance

    Life insurance that a company or firm purchases to provide the ...
  3. Business Interruption Insurance

    A form of insurance coverage that replaces business income lost ...
  4. Business Owner Policy - BOP

    Insurance policies that combine protection from all major property ...
  5. Life Insurance

    A protection against the loss of income that would result if ...
  6. Corporation

    A legal entity that is separate and distinct from its owners. ...
RELATED FAQS
  1. What is disability-income insurance?

    Disability-income insurance is insurance that provides financial benefits to a policyholder in the event of sickness or ... Read Full Answer >>
  2. What are the restrictions for naming a given individual as my contingent beneficiary?

    Life insurance is an important part of estate planning. It allows you to ensure that you can financially take care of the ... Read Full Answer >>
  3. What debt/equity ratio is typical for companies in the insurance sector?

    The debt-to-equity ratio is calculated by dividing total liabilities by total equity, and it is used to measure leverage. ... Read Full Answer >>
  4. How does the risk of investing in the insurance sector compare to the broader market?

    Due to economic, demographic and interest rate trends, there is less risk when investing in the insurance sector compared ... Read Full Answer >>
  5. What is the main business model for insurance companies?

    Insurance companies base their business models around assuming and diversifying risk. The essential insurance model involves ... Read Full Answer >>
  6. Which insurance companies pay the highest dividends?

    For income investors, finding companies that pay above-average dividends consistently is key to creating and sustaining a ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    How To Create A Business Succession Plan

    Make sure the business you built continues to thrive long after you've left the helm.
  2. Investing Basics

    Human Capital: The Most Overlooked Asset Class

    The skills and knowledge that allow you to make money are your best asset. Remember to invest in yourself!
  3. Options & Futures

    Choosing The Best Disability Insurance

    Social Security benefits can be hard to collect. Find out why you need disability insurance to protect your income, and learn how to choose the right policy for you.
  4. Professionals

    Indexed Universal Life Policies: Watch These Risks

    By properly vetting indexed universal life policies, advisors and savers can avoid contracts that could prove overly costly over the long run.
  5. Insurance

    India's Two-Child Policy

    As of 2014, 11 Indian states have passed laws to restrict Indian citizens from having no more than two children.
  6. Professionals

    Tips for Helping Clients with Life Insurance Needs

    Life insurance needs will likely change over the client’s lifetime and again financial advisers can provide an objective sounding board.
  7. Insurance

    Explaining Insurance

    Insurance is a form of contract between an individual and an insurance company that spreads risk in exchange for premium payments.
  8. Insurance

    Don't Lose Your Wealth Due To Healthcare Costs

    This article will highlight the use of an ILIT type of trust to protect wealth in the case of serious illness and transfer wealth in the event of death.
  9. Professionals

    How to Fund Retirement with Insurance

    So you've contributed the max to all available retirement vehicles...now what? Consider a permanent life insurance policy (and its fee structure).
  10. Retirement

    IUL Insurance: An Alternative Retirement Plan?

    Indexed universal life insurance is the rise. But critics argue that wisely allocated IRA and 401(k) funds will normally offer better returns.

You May Also Like

Hot Definitions
  1. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  2. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  5. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  6. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
Trading Center