Susan E. Thomas CPA
Number of policies needed with a cross purchase plan
When using life insurance with a buy-sell agreement, either the company or the individual co-owners (shareholders or partners) buy life insurance policies on the life of each co-owner. In an entity purchase (or stock redemption) buy-sell agreement, the business itself buys separate life insurance policies on the lives of each of the co-owners.
In a cross purchase buy-sell agreement, each co-owner buys a life insurance policy on each of the other co-owners. Each co-owner usually pays the annual premiums on the policies they own and are the beneficiaries of those policies.
If the company has numerous co-owners, many life insurance policies will be needed to fund a cross purchase buy-sell agreement. The number of policies needed for funding can be a disadvantage to the use of a cross purchase agreement.
How many policies will be needed? Enter the number of owners of a business and click the button to get the result.
Number of owners
Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011