1. 4330 POINTS
    Jerry Vanderzanden, CLU, ChFC
    Co-Founder, Coastal Financial Partners Group, California
    In a business with, say, two equal shareholders, life insurance can be cross-owned to fund a written cross purchase buy-sell agreement. Shareholder A owns, and is the beneficiary of, a policy on the life of shareholder B. B buys a policy on A in the same way. If B dies, the buy-sell agreement would normally provide that A buys the shares of B. The life insurance proceeds A receives income tax free would provide the cash necessary to meet this obligation.
    Answered on May 6, 2013
  2. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Cross purchase life insurance would be the life insurance policy used to fund a buy-sell plan. In a buy-sell plan funded by cross purchase life insurance, each business owner purchases a life insurance policy that would pay them the amount it would take to buy out the others, if their partner(s) died.
    Answered on October 20, 2014
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