If your business loses a shareholder due to injury, illness or death, your business will need a safety net in place to keep everything running as it should be. That's exactly what shareholder protection delivers. This business insurance ensures you have the means to repurchase shares if necessary. Want to know more? We've covered all the details below.
Shareholder protection is a type of business insurance that protects your company should a shareholder pass away or be incapacitated. Unlike life insurance, shareholder protection is designed exclusively for businesses for a particular purpose. The company will receive funds that can then be used to buy back the shares of that individual.
Why would you need to buy back shares? As a business, it is a priority to ensure the continuation of your company without any delays or disruptions. Buying back shares can ensure continued ownership and prevent the shares from being inherited or passed on elsewhere. By taking out shareholder protection, you ensure that the shares return to the business owner or other shareholders should anything happen.
Sudden buyouts of shares can be crippling for any business. Shareholder protection offers that extra peace of mind, ensuring you have the ability and funds to buy back the shares of a deceased or incapacitated owner.
From confusing beneficiary cases to potential rival buyouts, you want to have the means to ensure shares in your business don’t fall into the wrong hands.
Any individual who is a shareholder in a company is eligible for shareholder protection. But the exact details and premiums of the coverage will vary in the same way they would for standard life insurance. For example, someone who was incredibly fit in their thirties could have lower premiums than someone aged 60+ with health problems.
Provided the individual agrees to sell their shares to the business or other shareholders, most individuals will be eligible for shareholder protection. It’s also worth noting that shareholder protection is intended for active shareholders. So, if you have a shareholder retiring in five years, it wouldn’t be the right move to insure them for twenty years.
As a way to protect your business and ensure no potential issues relating to shares later down the line, one of the most significant benefits of shareholder protection is peace of mind. If a shareholder dies with shareholder protection in place, there can be no confusion over beneficiaries or sales of shares – making it easier for everyone involved to handle the estate following death.
In the case of illness or injury, shareholder protection can help to ensure a smooth transition and take the stress away from family or loved ones. In addition to the benefits for the shareholder and their family, this process also benefits businesses directly. For small businesses, the funds to buy out shares may not be available or cause immediate hardship. Shareholder protection insurance helps to prevent this issue by providing the money needed for buyouts without delay.
Are you considering getting coverage for your shareholders? If shareholder protection insurance would suit your business needs, our expert team at WIS Business Protection can help. We have extensive experience in handling insurance services for businesses of all shapes and sizes, and our industry connections allow us to find the most suitable deal for you.
If you’re looking for more information on shareholder protection, our friendly team are here to help. Why not book a meeting with us to discuss what we have to offer today? Whether you’re curious about the benefits of shareholder protection or you’d just like more expert insight, we’re here to help you find the best deal on your insurance.
Ready to book a meeting with our specialised team at WIS Business Protection? Our diary is open to you. Whether you have questions about our insurance or you want to know more about what we do, our team are on hand to assist you.
