Funding an entity type of buy-sell agreement with life insurance requires fewer policies than in the case of the cross- purchase type.

Question

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In an entity-purchase agreement, the business itself purchases a single policy on each partner or shareholder, whereas in a cross-purchase agreement, each partner/shareholder must purchase a policy on every other partner/shareholder, leading to a higher number of policies as the number of partners/shareholders increases.

Funding an Entity Type of Buy-Sell Agreement with Life Insurance