Two equal partners in a business worth $100,000 enter into a Buy and Sell Agreement to assure continuation of the business in the event of the death of the other partner. Which of the following funding arrangements BEST meets their needs?

While this option provides a total of $200,000 in insurance coverage, it does not address the specific need for each partner to buy out the other's share. If one partner dies, the $100,000 would not necessarily cover the buyout of the deceased partner's half of the business, which is valued at $100,000.

This choice ultimately fails to meet the business's needs because the policies would provide funds to the deceased partner's estate rather than directly facilitating a buyout of the deceased partner's share. The surviving partner would still be left without adequate funds to purchase the full $100,000 interest in the business.

Although this option would provide sufficient funds for a buyout, it creates a potential over-insurance situation where each partner would have more than enough funds to cover the business value. This could lead to unnecessary complications or disputes regarding the excess funds and the valuation of the business.