What type of insurance arrangement typically involves a life insurance policy purchased for each partner in a business?

The correct choice is Buy-Sell Life Insurance because this type of insurance arrangement is specifically designed to protect a business in the event that one of the partners or owners passes away. In a Buy-Sell agreement, a life insurance policy is purchased for each partner, which ensures that the business can continue operating without financial disruption. The proceeds from the insurance policy are used to buy the deceased partner's share of the business, providing financial security for the surviving partners and allowing them to maintain control of the business.

Key Person Insurance, while useful, focuses on insuring individuals whose death could significantly impact the company, not specifically for buy-sell arrangements. Group Life Insurance covers a group of individuals under a single policy, typically provided by employers to their employees, rather than to individual business partners. Franchise Insurance caters to franchises and addresses specific risks faced by franchise owners, which does not pertain to the partnership structure addressed by Buy-Sell Life Insurance. Therefore, the nature of how Buy-Sell Life Insurance operates in business partnerships makes it the correct answer.