Shareholder Protection Insurance

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Shareholder Protection protects your business and their families

Ensuring your business thrives for years to come requires careful planning. Shareholder protection can be a key part of your succession strategy.

This safeguard helps navigate the unexpected, such as the passing of a shareholder. By having a shareholder protection insurance policy in place, you can guarantee the continued success of the business and provide financial security for the families of your shareholders.

How Shareholder Protection Insurance can help…

In the event of a business shareholder/owner dying or being diagnosed with a terminal illness (life expectancy less than 12 months) or one of the policy-defined critical illnesses, share protection provides a lump sum to the surviving shareholders to help purchase the shareholding in the business.

Here are some advantages of taking out shareholder protection insurance cover to safeguard your business:

You stay in control, by preventing the shareholding being inherited by an unwanted beneficiary, who may not align with your plans and operation of the company
Disruption is minimised, by making an eventual transfer of the shareholding as orderly as possible
You have flexibility about how to manage the shares
You will not need buy-out capital, loans, or to use savings
The shareholder’s beneficiaries have clarity as to what they will receive for selling the shares

Shareholder Protection Insurance FAQs

How much shareholder protection insurance do you need?

The amount of shareholder protection insurance you need depends on how much money your remaining partners would need to buy out the shares of a deceased or critically ill shareholder.

Consider how much capital they’d require to maintain ownership. Critical illness cover can be added to the policy for an extra cost, providing a payout if a shareholder is diagnosed with a serious illness.

What affects the cost of shareholder protection Insurance?

As with other types of insurance, the cost of cover will depend on a number of factors relevant to the insured person, including:

Their age
Lifestyle and occupation
Health status (and health history)
Smoking status
Alcohol consumption
Family medical history.

What happens to shareholder protection if an owner leaves?

Shareholder protection is designed to safeguard remaining shareholders in case a co-owner dies or becomes critically ill. If an owner leaves the business voluntarily, the protection usually ends for them.