With five owners of a business, an entity purchase plan usually makes more sense than a cross-purchase plan.

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When there are five owners of a business, an entity purchase plan is often more practical than a cross-purchase plan. In an entity purchase plan, the business itself buys life insurance policies for each owner, and in the event of an owner's death, the business uses the life insurance benefits to purchase the deceased owner's share of the business. This avoids the need for individual owners to purchase life insurance policies on each other and simplifies the process of transferring ownership. A cross-purchase plan, on the other hand, involves each owner purchasing a life insurance policy on each of the other owners, which can become complicated and expensive with more owners involved.

With Five Owners of a Business, an Entity Purchase Plan