What is the key purpose of a cross-purchase plan in a business context?

The key purpose of a cross-purchase plan in a business context is to ensure the continuity of business ownership after a principal's death. This type of arrangement is designed to facilitate the transfer of ownership interests among the remaining business partners or co-owners when one owner dies. By having the surviving owners purchase the deceased owner's share of the business through life insurance proceeds, the plan provides financial resources to effectively execute the transfer. This ensures that the deceased owner's family is compensated fairly while allowing the remaining owners to maintain control and continuity of the business operations, avoiding disruptions that could arise from disputes or loss of ownership structure.

The other options, while they may relate to various aspects of business management, do not capture the essence of a cross-purchase plan. Distributing profits equally among surviving owners doesn’t address ownership transfer, a retirement package for employees is unrelated to ownership continuity, and expanding business operations post-death does not directly pertain to the fundamental purpose of facilitating ownership transition.