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This type of cover provides a safety net should a business owner die or suffer a critical illness. The policy is designed to provide a cash injection to ensure the remaining owners can keep control of their business.
The cover available need depends on your business:
Shareholder Protection: This cover is for limited companies where each shareholder takes out life insurance for the benefit of their fellow shareholders.
Partnership Protection: This cover is for partnerships and limited liability partnerships where each partner takes out life insurance for the benefit of their fellow partners.
What are the implications of not having Share or Partnership Protection?
In the event of a death of a shareholder or partner, their share of the business is generally passed on to their beneficiaries. In most cases the remaining shareholders will want to keep control of their business and purchase the available shares. However, capital may need to be raised to purchase the shares.
If there is no cover in place, there is a risk that there won’t be enough capital, and this then leaves the business vulnerable to having the shares retained by individuals who know nothing about running the business, or they could even be sold on by the beneficiaries. These scenarios can present a significant risk to your business.
How can Share or Partnership Protection help?
Share or Partnership Protection ensures that the control of a business remains with the surviving owners, rather than passing to someone who is unwilling or unable to run it. It also prevents the sale of shares to a competitor.
Get in touch
If you would like to discuss your business continuity requirements and how this type of cover can provide your business and shareholders with future security, please get in touch by completing the form below.