In an Entity Purchase Plan, the business itself, not the individual owners, applies for, pays the premiums for, and is the owner and beneficiary of policies on each owner. The example below illustrates that should Owner A die or become disabled, the business receives the cash from the insurance company and purchases the business interest from Owner A or his or her estate, according to the terms of the buy-sell agreement.

Note: Several factors can enter into determining which type of buy-sell agreement to use. A client should always consult an attorney when making these decisions.

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