Life · Chapter 10 · Business Continuation
Cross-Purchase Buy-Sell Plan
Definition
The OWNERS THEMSELVES (not the business) agree to buy each other out. Each partner buys, owns, and is beneficiary of a policy on each other partner — 3 partners = 6 policies (n × (n−1)). Preferred when the number of owners is small.
Exam tip
The policy-count math is a classic exam question: 3 partners → entity = 3 policies, cross-purchase = 6. Four partners → cross-purchase = 12!
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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