Shareholder protection is beneficial if your share of a business is one of your most valuable assets. Taking out this kind of cover can benefit your family if you were to pass away, and it can protect your business in the long term. Shareholder protection is sometimes also known as succession planning, offering shareholder protection.
Shareholder protection can remove that sense of uncertainty following a business shareholder’s passing or diagnosis of a terminal or a critical illness, providing those involved with a pay-out to cover any financial matters.
Shareholder protection allows you to put an exit strategy in place, should the worst happen. The cover uses a life insurance policy in order to provide a lump sum pay-out. If you were to pass away, it means the remaining owners or shareholders have enough capital to buy your shares from your family.
This, of course, means that the family will receive money from the owners, in order to help with any financial struggles in the worst-case scenario.
If your business is crucial to your income and to your family’s ability to cope financially, it is worth protecting. Shareholder protection will also provide peace of mind to your fellow business partners and the future of the business.
Shareholder protection may also be known as director protection insurance, partnership protection or ownership protection. However, they all work in the same way.
Each type should include considerations such as how much cover, who the shares will be left to and what that shareholder will do. It is important to speak to an industry expert when taking out shareholder protection insurance, to make sure it is done with your best interests in mind.
Please note that the descriptions above do not constitute financial advice and may change depending on individual circumstances and budgetary requirements.
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