In a Cross Purchase Plan, each owner applies for, pays the premium for, and is the owner and beneficiary of the policies on, the other owner(s). The example illustrates that should Owner A die or become disabled, Owner B receives the cash from Ohio National and purchases the business interest from Owner A or his or her estate, according to the terms of the buy-sell agreement.

As a result, Owner A or his or her heirs receives the full value of the business interest in cash, and Owner B assumes full control. Though this arrangement works efficiently when there are just two or three principals, it can become cumbersome in larger businesses. For example, if four businessowners enter into a cross purchase buy-sell agreement, they will each buy policies on the three other principals. Thus, 12 separate policies would be needed!