Shareholder Protection Insurance
Shareholder Protection Insurance
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How it works
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Submit the details of the shareholders who need to be covered.
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What is Shareholder Protection Insurance?
Shareholder Protection Insurance is a life insurance policy designed to facilitate the buyback of shares from a deceased shareholder.
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. So along with key man insurance, companies should also look seriously at protecting their shareholders.
Buy back of shares is the procedure of buying the shares back from the deceased’s (or seriously ill) shareholder’s estate. Shareholder Protection Insurance is a life insurance policy designed to facilitate this buyback of shares. In the event of death or critical illness, a sum of money is paid to the remaining shareholders to allow them to buy back shares from the deceased shareholder’s wife or husband. In effect this allows the remaining shareholders to retain the ownership of the company. It also rewards the wife or husband with a monetary value of the shares they have inherited.
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How Does It Work?
Most of the time a cross option agreement will be used along side the policy. Please check out our blog on cross options agreements.
How Much Cover Do I Need?
This will depend on how much the company shares are worth and what you would be willing to sell them for. Business’s will sometimes need to be valued in order to get an idea of each shareholdings value.
As a rule of thumb, each person should be covered to the value of their shareholding. Most companies take out a cover for a term of 5 years and of course share values can go up and down. In this scenario, we can recommend to index link the cover which means the sum will go up every year. Or just cover yourselves for more than the current value to try and foresee any increase in value.
It may be worth seeking professional advice on the value of the company before valuing the shares. We also generally advise clients to think about what amount of money they would want their family to receive for the value of their shares. If you were to die or become ill, what would you want to sell your shares for?
What Is The Cost of Protecting Shareholders?
The cost of shareholder protection insurance will depend on each individual life assured. Quotes will be based on the age, sum assured, smoker status and term of the policy. Actual terms offered will also depend on the health of the individual.
Why not give us a call or fill in the above quote form to get a quote. It takes no more than 5 minutes.
Why Shareholder Protection Insurance?
It doesn’t matter what type of industry you work in. Losing a shareholder to by death or serious illness can be catastrophic. It is therefore critical to ensure that you protect your business and livelihood with shareholder protection.
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The standard of service from MyKeyMan was first class. They kept me up to date with progress on my Relevant Life Policy, followed up promptly following delays caused by my medical practice being slow in compiling reports, and responded instantly and clearly to any questions I had.
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Our dedicated team are here to offer you expert FCA qualified advice along with 1st class support to make sure the process is fast and simple.
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