Shareholder protection insurance is an incredibly important piece of cover you should consider for your business. The loss of a shareholder can cause serious events for businesses who rely on their owners for direction, as well as the equity they provide. Without a plan in place, a shareholder’s equity would pass to their estate, meaning part of the business could be left to someone with no interest in the future of your business. Alternatively, they may decide to sell their shares to a third party. If you’re looking to provide a safety net for your business, shareholder protection could be what your business needs to protect its assets through the most uncertain times. Let’s take a look at how shareholder protection can protect your business for the years to come.
What is shareholder protection?
The unfortunate death of a business owner can be very traumatic for their family as well as those connected to them within the business. The loss of a business owner can have damaging effects financially on their dependents and business if they don’t have the right cover in place. Shareholder protection insurance provides a lump sum payout to either one named beneficiary or a group of beneficiaries so that they have the funds to purchase the equity if a partner passes away. There are many types of shareholder protection insurance with varying cover levels and criteria to choose from in the market. Some shareholder protection policies also have critical illness elements that can provide protection if a shareholder has an eligible condition which means they can no longer work.
Shareholder protection insurance is designed to avoid any hiccups that may be experienced with the loss of a shareholder. Shareholder protection will offer peace of mind to all with the arrangement of insurance with a suitable trust and cross option agreement. Should the worst happen, the remaining partners or shareholders would have the option to buy the deceased’s shares, allowing them to maintain control of the business. In return, shareholder protection will ensure that the family of the deceased also receive, in cash, the agreed value of their loved one’s shares of the business.
The value of shareholder protection
Shareholder protection insurance provides a form of succession planning for your business now and for the years ahead. The uncertainty of a business’s future can be daunting, but having shareholder protection in place will allow for a clear view of how the shareholder’s holdings will be allocated. This means that there is no risk of the shares being held by a disinterested family member who may end up selling to someone with a different strategy in mind. It’s also key to note that shareholder protection will provide a sum that can be used by other shareholders to purchase the equity which means that they don’t need to save any cash or use any of the business’s savings.
Shareholder protection also provides peace of mind for the future of the shareholder’s family. Shareholder protection insurance will provide their family with the certainty that they will get an agreed sum for the shares, meaning they’ll have less to worry about during their difficult time.
How Protectus can protect your business
Shareholder protection insurance can seem like a complex area of insurance to understand and navigate. However, regardless of the industry you operate in, it’s critical to ensure that you protect the future of your business for both the success of your operations and the wellbeing of your employee’s families. With our extensive expertise in this field, we can easily simplify the policy finding process to ensure that everything is set up as it should be. We hold one-to-one meetings with all of our clients to make sure you find the shareholder protection insurance policy that best meets your business’s needs alongside completing extensive market reviews to ensure the cover you get has everything you will need to carry on in uncertain times.
Your business may already have insurance but there are other areas of the insurance market that you could be benefitting from. At Protectus, we can help find cover for businesses from relevant life plans to international health insurance, making sure that your business and employees are protected against the unexpected. Get in touch to see how we can work with you to develop insurance solutions best suited to your business. https://www.protectushealthcare.com/company-insurance/shareholder-protection/