Insurance for a partnership offers a lump sum amount to compensate for the event of an insured partner's death or inability to continue with the business. Generally, the policy is bought by the business and states the business as its beneficiary.
Hence, the cash payment of the lump is paid to the business, where the surviving partner(s) would use that payment to buy the deceased's shares from their next of kin.
This way, the deceased partner's family would get everything they are owed, and the surviving partner(s) can run their business as they see fit. Neither party would be stuck in a business partnership they do not wish to be in.
Some insurance partnership plans may also involve the partner taking life insurance under their own names for each other's benefit. This allows the surviving partner to make immediate payments on the other partner's death due to legal obligations.
Lastly, the premiums paid under this policy must be done regularly during the policy term and will depend on factors like the value of the partnership, the company's net assets, etc.