The Benefits of Shareholder Protection Insurance

Shareholder Protection can provide a succession plan for your business.

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Shareholder Protection can provide a succession plan for your business. After all, it takes a lot of hard work to make sure your business becomes, and remains, successful. When thinking about your exit strategy, it’s important to consider the possibility that you may pass away before that point. If that happened, what would happen to the business and the shareholder’s family?

 

In this section, we’ll look at how Shareholder Protection insurance works and why you should consider taking out this type of cover.

 

What is Shareholder Protection insurance?

 

Shareholder Protection cover is a type of business protection insurance. It can provide shareholders with the necessary funds to buy shares back from each other, if one of you were to pass away. It can also help if a shareholder becomes too ill to work anymore.

 

How Does It Work?

 

Shareholder Protection insurance provides a set-out, binding agreement between shareholders. It ensures shares remain in the business. When a shareholder passes away, their shares become part of the estate which usually goes to the family. This means the family now owns the shares.

 

Shareholder Protection allows the other shareholders to buy back the shares from the family. This type of insurance benefits all parties. The business can keep the shares, while the family will receive financial support from the monetary value of the shares.

 

There are different ways in which this type of cover can be set up, so it’s best to seek advice from a business protection expert. This can ensure the policies are set up correctly. It also means the valuation of the business is accurate and everyone understands the agreement they are entering into.

 

What are the benefits of Shareholder Protection?

 

Shareholder Protection insurance is designed to help your business out during a difficult time. The loss of a shareholder can throw a company into uncertainty, especially if it happened unexpectedly.

 

Shareholder Protection can offer financial stability, both for the business and for the family. It also means that businesses don’t need to save up capital or dip into any savings for funds to purchase the additional shares.

 

It can mean the remaining business owners keep control of their firm. Without a policy like this in place, the shareholder’s stake in the business could be inherited by an unwelcome beneficiary, or end up being sold to a rival.

 

Having a policy in place means there can be a smooth transition for shares to change hands, keeping disruption within the business to a minimum. What’s more, it can also mean the beneficiaries have a clear idea of the amount they will receive when selling the shares back to the shareholders.

 

Should you get Shareholder Protection with or without Critical Illness cover?

 

It’s important to consider the needs of the business when deciding on the right business protection insurance. It can all depend on how much peace of mind you want to achieve

 

Shareholder Protection policies with Critical Illness cover can be more expensive, but it can offer extended cover to protect the future of the business.

 

Finding the right Shareholder Protection providers

 

The market leaders in the UK include well-known providers. Most experts would recommend seeking professional advice first. Online rates tables can give you an overview of what these providers offer, but these comparison tools are not bespoke to your business.

 

The question of who is the best shareholder protection insurance provider is a subjective one. The right insurer for you will be the insurer that is best positioned to meet your company’s cover requirements, and offer the most cost-effective premiums.

 

An independent Insurance Broker can help you find the right provider by matching your firm’s needs and requirements to an insurer’s specialty. This is where we can help.