All of the following are examples of a Business Continuation Plan EXCEPT

• A. Buy-sell funding through life insurance
• B. Deferred compensation
• C. Key employee insurance
• D. Purchase agreement funding

Answer: (B)

The main idea here is how a business continuation plan is funded to ensure smooth ownership transfer and ongoing operation after a key owner’s departure or death. The typical tools are methods that provide liquidity to buy out the owner’s interest or to protect the business from losing a crucial person. Buy-sell funding through life insurance is a classic method: life insurance on the owners funds the buyout so the business or the surviving owners can acquire the departing owner’s share. Purchase agreement funding works the same way, providing the money to complete the transfer when needed. Key employee insurance also fits because it helps the business withstand the loss of a vital contributor by providing funds to replace that talent or cover related costs.

Deferred compensation, on the other hand, is a compensation arrangement designed to pay an employee at a later date, typically for retention or retirement planning. It is not a funding mechanism to transfer ownership or to provide liquidity for a buyout, so it does not align with the aims of a business continuation plan.