What is Shareholder Protection Insurance?
Shareholder protection insurance covers you and your business in the event of a business owner or part owner dying, it allows the remaining shareholders to stay in control of the business.
Essentially, this insurance requires a series of legal agreements to pay a lump sum which manages the shares after someone passes away. A lump sum can help the remaining shareholders to buy out the shares of the deceased partner. Following on from this, the business can continue to run smoothly, by the same owners and shareholders.
There are different types of shareholder protection insurances:
Life of another – This insurance is used by a company with 2 shareholders, in which they both apply for each other. Should one them die, the surviving member will be paid enough to purchase their partners share.
Company share purchase – Using this method, the company as a whole will purchase any shares from the deceased holder.
Own life – The own life insurance allows an individual to take out insurance on their self, if that shareholder died their shares will be divided equally between the remaining shareholders.
Why should you have it?
In the unfortunate event of a major shareholder or owner of a company dying, the business essentially gets passed down to their family members, meaining that the remaining shareholders could lose their share in control or could potentially even lose everything.
Having a business plan can always make everything a lot easier for the future and having share protection insurance even more beneficial. It takes away any stress and worry about purchasing assets after someone passed away as, luckily, the insurance will pay out funds that can be used to pay for the deceased’s shares as quickly as possible. Not to mention the financial compensation and extra support offered to the deceased’s family members.