11 Purdeys Way Purdeys Way, Rochford, England, SS4 1ND
11 Purdeys Way Purdeys Way, Rochford, England, SS4 1ND
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One of the most damaging events a business can fall victim to is the death of a major shareholder. Should a shareholder or owner die unexpectedly, the event can have a serious impact on the company, not to mention the shareholder’s family. To help prepare your company and protect it from issues following the death of a shareholder, you can take out Shareholder Protection Insurance.
This type of insurance allows your company to buy back shares from either the deceased shareholder’s family or the shareholder themselves if they are critically ill. By buying back the shares, the company and surviving shareholders can retain ownership and control of the company. It also offers the shareholder’s family the monetary value of the shares they have inherited.
Key Person Insurance is a vital form of business protection. It ensures your company remains financially…
Shareholder Protection Insurance is designed to help business owners protect their financial interests if a fellow shareholder passes away or becomes critically ill. This insurance provides a financial safety net that allows surviving shareholders to retain control of the business while ensuring the affected shareholder’s family or estate receives fair compensation.
There are various shareholder insurance policies that you can get. This includes the following:
A shareholder protection agreement must be put in place for things to run smoothly. This is sometimes called a double option agreement or a cross-option agreement. For more information on how these work, please check out our blog on cross options agreements.
This involves a careful assessment of factors such as the value of the business, the ownership structure, and the financial needs of the business partners in the event of a claim. Here are some general steps to help you estimate the amount of cover needed:
The cost of a Shareholder Protection Insurance policy will depend on each individual life assured. Quotes will be based on the age, sum assured, smoker status and term of the policy.
The Shareholder Protection tax treatment can vary depending on factors such as the ownership structure of the business, the type of policy, and the specific circumstances of the shareholders.
Why not give us a call or fill in the above quote form to get a quote? It takes no more than 5 minutes.
Critical Illness cover is an additional feature that provides a lump sum payment if a shareholder is diagnosed with a specified critical illness, such as cancer, a heart attack, or stroke. It’s a good idea to get this cover as it provides additional financial protection in case a shareholder can no longer actively participate in the business due to their illness.
Including Critical Illness cover can provide additional financial protection in case a shareholder becomes critically ill and is unable to actively participate in the business. It can then facilitate a buy back of the shares
There are many shareholder protection providers in the UK who offer critical illness as part of the contract. Policies can vary greatly in terms of the illnesses that are covered so do your research and find out which ones offer the best cover. Our advisors can help you do this.
Losing a shareholder to death or serious illness can be catastrophic for your business unless you’re prepared. Should a fellow shareholder pass away, Shareholder Protection Insurance means surviving shareholders don’t have to worry about finding the money to buy back the shares. Instead, they will receive funds that allow them to buy the deceased’s shares quickly and give full payment to the shareholder’s family members.
You may also want to buy Key Person Insurance to cover your company in case a valuable member of your team (such as a team leader, founder or top sales person) dies or becomes critically ill and can no longer work. Relevant Life Insurance will pay out a lump sum to an employee’s beneficiaries in the event of their death.
Shareholder Protection Insurance gives the following benefits to your company and shareholders:
Overall, Shareholder Protection cover can be a valuable tool for businesses and shareholders to protect their interests, ensure business continuity, and provide financial security in case of unexpected events.
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Yes, it’s a good idea to get Shareholder Insurance to safeguard your company against the potential loss of shares or cost to buy them back should a major shareholder die or become critically ill.
It’s important to have a shareholder’s agreement that lists your rights as a shareholder. You should also read the terms and conditions of the agreement to see what happens to your shares if you were to die or become critically ill.
In a company share purchase agreement, the business pays the premiums for each shareholder. When the shareholder dies, the share is given back to the company.
HMRC will declare this a P11D benefit-of-kind if the company pays the insurance premiums. The shareholders are required to pay any relevant Income Tax and National Insurance contributions based on the value of the premiums.
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