A policy that ensures business continuity after the death of a partner is based on what kind of agreement?

The correct answer is a buy/sell agreement, which serves as a vital mechanism in ensuring business continuity after the death of a partner. This type of agreement stipulates the terms under which the remaining partners or a business will buy out the deceased partner's share of the business.

By having this agreement in place, the surviving partners can avoid potential disruptions caused by the death of a partner. It provides a clear plan on how the partnership interest will be transferred, ensuring that the business can continue to operate smoothly. The predetermined price for the buyout can alleviate disputes and provide financial stability during a challenging time.

While options like a cross-purchase agreement and stock redemption agreement often have similar purposes in facilitating continuity and ownership transition in a business, they are specific types of buy/sell agreements. A partnership agreement outlines the general terms of the partnership and may detail some aspects of ownership transition, but it does not specifically address the buyout of a deceased partner's interest in the way a buy/sell agreement does.