What would happen to your business if a co-director died prematurely?
• Would you maintain full control over your company?
• Do you or the company have the necessary funds to buy back shares from the business from your co-directors’ next of kin?
• Has your business put a plan in place for such events?
What is Shareholder Protection?
Shareholder or Partnership Protection is a life insurance plan taken out on the life of each director or partner of a company. A company may take out a shareholder protection plan at any stage during its business lifetime. The company will pay a premium based on the level of cover required and a given value of each director’s shareholding within the business. Should the unexpected death of a director happen the company’s Shareholder Protection plan will pay out a lump sum. This lump sum can be used to buy back the deceased directors’ shareholding from their next of kin.
Benefits of Shareholder Protection
• The company directors know they will be able to keep control of their business.
• No need for remaining directors to raise personal funds.
• The deceased directors next of kin is not obliged to become involved in the business.
• The remaining directors know they will have business stability and continuity.
• Shareholder Protection Insurance can also provide for serious illness cover.