In a Cross Purchase plan involving two equal partners, how much does partner A buy a policy on partner B for?

In a Cross Purchase plan involving two equal partners, each partner takes out a life insurance policy on the life of the other partner to ensure that there are sufficient funds to buy out the deceased partner's interest in the business. The amount of the policy is generally based on the value of the partnership or the buy-sell agreement in place.

If partner A buys a policy on partner B, typically, the coverage amount would be set according to the value of B's share of the partnership. In the case where the partnership is valued at a certain amount, such as $150,000 total, then each partner's share would be $75,000.

Therefore, if partner A buys a policy purely to cover partner B's half of the business, $75,000 would be an appropriate amount to ensure that if something happens to partner B, partner A has the means to buy out B’s share and maintain the continuity of business operations. This aligns with the goal of a Cross Purchase plan, which is to prevent any disruption in the business due to a partner's death.