Two business partners own life insurance on each other. If one partner dies, which of the following contracts will allow the other partner to buy 100 percent of the business interest?

The correct answer is a Buy and Sell Agreement. This type of agreement is specifically designed to facilitate the smooth transition of ownership in a business upon the death of one of the partners. In this scenario, if one partner passes away, the surviving partner can use the life insurance benefits from the policy taken out on the deceased partner to purchase their share of the business. This ensures that the deceased partner's interest is transferred to the remaining partner, thereby allowing them to retain full control of the business.

The other options do not serve the same purpose. A Key Employee Life policy is designed to protect a business from the financial loss that might occur due to the unexpected loss of a key employee but does not involve the ownership transfer of the business interests. Survivorship Life insurance covers two lives and pays out only upon the death of the second insured, which is not suitable for immediate business interest transfers upon the death of one partner. A Joint and Several Annuity typically involves multiple investors and assurances about certain payouts, but it is unrelated to business ownership and life insurance agreements. Thus, the Buy and Sell Agreement is the only option that explicitly provides the necessary contractual framework for one partner to acquire the deceased partner's share.