We are licensed insurance brokers, not CPAs or attorneys. Calculator results are educational estimates, not quotes, approvals or tax advice. Confirm tax and legal points with your own CPA or attorney.
Buy-sell funding calculator
An educational estimate that runs in your browser. Nothing you type here is sent to us.
| Policies in a cross-purchase (every owner insures every other owner) | |
| Policies in an entity redemption | |
| Policies in an insurance LLC |
Each owner's figure is what the buyers would owe that owner's family at that owner's death. It is not money needed for every owner at once, and it does not subtract coverage or reserves you already have.
What this number means: What the buyers would owe each owner's family at that owner's death, based on the agreed value and ownership you entered.
What it does not mean: A review of your agreement, its valuation method or the tax result. Your attorney and CPA should confirm those, and carriers still underwrite each owner.
Your numbers stay on this page. If you want Erik to see them, add them to the notes in your request.
Enter the agreed business value and each owner's percentage (they must total 100%). The calculator shows the funding each owner's buyout would need at that owner's death, the number of policies a cross-purchase (n x (n - 1)), entity redemption (n) or insurance LLC (n) would use, and an illustrative Connelly effect: how company-owned proceeds could raise the value of the largest owner's interest for estate tax.
Not sure which structure fits? Compare cross-purchase and entity redemption →
On this page
Reading the results
- Funding per owner is that owner's share of the agreed equity value: what the buyers would owe the family at that owner's death. It does not subtract coverage, sinking funds or reserves you already have.
- Cross-purchase in its simplest form has every owner own a policy on every other owner. Each owner's coverage is split among the buyers in proportion to what they would buy.
- Entity redemption uses one policy per owner, owned by the business.
- Insurance LLC also uses one policy per owner, owned by a separate partnership; see the insurance LLC buy-sell.
The Connelly illustration
In the 2024 Supreme Court decision in Connelly v. United States, life insurance a corporation collected to redeem a deceased owner's shares counted toward the company's value, with no offset for the redemption obligation. The calculator illustrates how that could raise the value of the largest owner's interest for estate tax if the company owned the policies. It is a simplified illustration, not an appraisal or a tax calculation. Whether it creates any tax depends on the owner's whole estate and the $15 million exemption; see After Connelly.
Also worth checking
- When was the agreed value last updated? Many agreements call for an annual certificate of value.
- Does the agreement fund disability and retirement, not just death? See disability buyout insurance.
- Term or permanent? See term vs permanent for buy-sell.
Take it to your attorney: buy-sell funding review checklist (PDF).
Frequently asked questions
How much life insurance do I need for a buy-sell agreement?
Enough to pay each owner's share of the agreed business value at that owner's death, less any funding already in place. Coverage is usually reviewed every year as the value changes.
Why does a cross-purchase need so many policies?
In its simplest form each owner owns a policy on each other owner, so the survivors can buy the deceased owner's shares directly. With n owners that is n times (n minus 1) policies. Trusteed arrangements and insurance LLCs reduce the count.
Start your life insurance request
Tell us what the coverage is for and who it would cover. For most requests we ask for each person's date of birth and sex so Erik can prepare for the call. We do not ask health or tobacco questions in this initial request. This is a request for help, not an insurance application or a promise of coverage.
Written by Erik Moran
Erik co-owns Moran Insurance Group with Amanda Moran and handles the agency's life insurance cases, from key person and buy-sell coverage to trust-owned policies. He works alongside clients' CPAs and attorneys, who make the tax and legal calls. More about Erik.
Sources
Moran Insurance Group is a licensed insurance agency. Our brokers are not CPAs, attorneys or tax advisors, and nothing on this page is tax, legal or investment advice. Tax figures and rules reflect our understanding as of October 2026 and can change. Coverage is subject to carrier underwriting and state availability. Confirm anything tax or legal with a licensed CPA or attorney before you act on it.