Shareholder Protection Insurance

08/07/2016 Filed under Accounts, Finance, Manchester, SME

One of the most damaging events a business can fall victim to is the death or incapacitation of a major stakeholder. Regardless of the industry you operate in, it’s critical to ensure that you protect your business with a safety net. After all, it represents not only the livelihood of you and your family, but also that of you employees and fellow stakeholders.  Should a business owner die or be incapacitated unexpectedly the event can have a serious impact on their enterprise, not to mention the shareholder’s family.

When it comes to distributing shares, family members and other beneficiaries may prefer to cash them in while other shareholders may wish to purchase the shares but may not have adequate funds at their disposal. This is where shareholder protection insurance becomes extremely useful.

Shareholder Protection Insurance cover protects your business should an owner or part-owner die or become incapacitated unexpectedly.

 

 

What is shareholder protection insurance?

Shareholder protection insurance is designed to ensure that the aftermath of a shareholder’s death or incapacitation is as smooth and stress free as possible. Either the fellow shareholders or the company as a whole take out insurance policies and, through writing up a series of legal agreements that set out how shares are to be managed if a stakeholder passes away, should a shareholder die, policy pay-outs can be used to purchase the shares of the deceased holder.

 

 

The benefits of shareholder protection insurance.

  • A safe and stable business plan – deceased shareholders are a guaranteed way to shake up operations and seriously jeopardise the strength and unity of a business. By taking out shareholder protection insurance, shareholders enjoy the total peace of mind that, should a fellow investor pass away, surviving shareholders will not have to worry about finding the money to purchase assets. Instead, they will receive pay-out funds that allow them to but up the deceased’s shares quickly and efficiently. This means business can return to normal as quickly as possible.
  • Support from family members – although shareholders generally have an in-depth understanding of how to leverage their assets, inheriting family members often don’t know how best to manage a portfolio and most would rather receive money as this is far more useful to them. Cash payments can also help to relieve the stress that families face when losing a family member. When taking out shareholder protection insurance, company stakeholders can rest easy knowing that their families will receive financial compensation in the case of their death. The policies guarantee a fair buy-out price as well as a quick, easy and stress free process.
  • Illness and disability – as well as supporting fellow shareholders and family members in the case of death, shareholder protection insurance can also be used to cover serious illnesses. With the correct agreements and policies in place, a sick shareholder is able to sell shares to continuing shareholders. Should a shareholder fall ill, the knowledge that they have shareholder protection insurance will be a big weight off their mind.

 

For further information on how Shareholder Protection Insurance can benefit you, your business and your family, contact Ian at Bright Wealth Management at i.crombleholme@brightwm.co.uk