Shareholder protection insurance is a policy that many organisations will put in place to help minimise the risks associated with their shareholders passing away.
Shareholder protection insurance is a policy many organisations will implement to help minimise the risks associated with their shareholders passing away. This insight aims to help you understand shareholder protection, the benefits, the risks of not having it, and how to find the right policy for you.
Shareholder protection insurance is a policy many organisations will implement to help minimise the risks associated with their shareholders falling critically ill or passing away. This insight aims to help you understand shareholder protection, the benefits, the risks of not having it, and how to find the right policy for you.
Shareholder protection insurance is designed to set out a legally binding plan of what happens to shares when a stakeholder falls critically ill or passes away.
The policy will determine who can purchase the shares and the amount they can take ownership of. Shareholder protection will also provide the financial means for remaining shareholders to buy said shares to ensure a smooth transition.
Shareholder protection aims to reduce the risk of a company being taken over by other parties and provides security to other holders by ensuring they have enough funds and the option to purchase shares. In short, its role is to legally bind all shareholders to a set of rules on what should happen as a result of a critical illness or death.
Shareholder protection insurance aims to provide stability and security to all company shareholders by reducing the risks associated with company ownership in the face of death or critical illness. How your company benefits wukk depend on its unique set-up and what you’re looking to gain from a policy, but an example of how you may benefit includes:
Not having a policy such as shareholder protection in place may present many risks, such as:
Shareholder protection can be claimed on in two scenarios:
When a shareholder protection policy is purchased, a cross-option agreement is created. This agreement outlines what happens for remaining shareholders when a claim is made on the policy.
The agreement ensures that there's a structured and fair transition that all shareholders agreed to at the start of the policy. It will define what happens to the shares, who they can be sold to, whether family members retain any shares, and more.
If you're a shareholder, you may benefit from a protection policy. They may be particularly relevant for closely held businesses owned by families, partnerships or limited companies where a select group of individuals holds share ownership.
By purchasing shareholder protection insurance, you may ensure that the legacy of your business and the work you personally contributed towards its success is rightly protected in the face of a tragic event.
The cost of a shareholder protection insurance policy will vary from company to company and depend on many factors unique to the shareholders, such as:
For an accurate cost of how much shareholder protection may cost you, we recommend that you speak to an independent advisor who will help you compare your options.
This is a free service we offer, with no obligation to purchase after presenting you with your policy. We'll aim to understand the unique needs of your shareholders and search the market for relevant policies for you to consider. To get started, please complete the form below.
Our advisors are available to answer any questions, compare or renew policies, and help advise you on insurance needs. To speak to someone, provide some contact information, and a member will be in touch.