A buy-sell agreement funding calculator for cross-purchase and entity plans

In a cross-purchase plan each owner insures every other owner, so the calculator shows n × (n − 1) policies, each covering the deceased's share divided among survivors. In an entity redemption plan the business owns one policy per owner, so it shows n policies, each equal to one owner's full share.

For a $3,000,000 business with three equal owners, each share is $1,000,000. Cross-purchase needs six policies of $500,000; entity redemption needs three policies of $1,000,000. Total coverage is the same; administration and tax treatment are not.

The definitions explain the trade-offs: cross-purchase gives surviving owners a higher cost basis in the shares they buy, while entity redemption centralizes premiums but provides no basis increase. They also note that the Supreme Court's 2024 decision in Connelly v. United States held that corporate-owned life insurance proceeds can increase a company's value for estate tax purposes.

It assumes equal owners and treats the value entered as the price the agreement sets. It covers death funding only. Real agreements may use a valuation formula or appraisal, cover disability, retirement and departure, and carry different tax consequences by structure, so the disclaimer directs owners to an attorney and tax adviser.

Unequal ownership, a trusteed or LLC cross-purchase, or a wait-and-see arrangement all need case design beyond the calculator. The definitions name the trusteed or LLC variation so owners with many partners know it exists.

The calculator estimates no premiums. Face amounts are what your producer takes to underwriting; pricing depends on each owner's age, health and the policy type chosen.

Life and business-planning agencies, commercial agencies that want to add life revenue to business accounts, and producers who work with CPAs and attorneys on succession. Any agency whose clients include professional practices, family businesses or partnerships has buy-sell prospects in the book already.

The calculator is especially useful as a review tool. Many agreements were funded once, years ago, at a value the business has long outgrown; the gap per owner makes that visible without an argument.

Referral partners can share the direct link with their clients, and the lead arrives with the structure already chosen.