Which of the following is NOT an example of a Business Continuation Plan?

• A. Deferred Compensation
• B. Buy-Sell Agreement funded with life insurance
• C. Key Person Insurance
• D. Cross-purchase agreement

Answer: (A)

Business continuity plans are about keeping the business operating and ensuring a smooth ownership transition after the death or disability of owners or key people. A buy-sell agreement funded with life insurance provides immediate liquidity to buy out a deceased owner’s interest, making ownership transfer orderly. Key person insurance funds the business to cover the financial impact of losing a critical employee and helps with replacement or successor planning. A cross-purchase agreement is a form of buy-sell where each owner purchases life insurance on the others to fund a buyout, again supporting a seamless continuation of the business.

Deferred compensation, by contrast, is an executive compensation arrangement aimed at retention and future payout, not specifically a mechanism for transferring ownership or maintaining business operations after a key event. Hence, it is not considered a business continuation plan.