The loss of a partner, member or shareholding director can harm the success of a business. Shareholder insurance ensures the help in maintaining control of a business is there when you need it the most, ensuring the remaining business owners can keep control of their business.
Shareholder Protection Insurance provides a financial safety net if a business owner or shareholder dies or is diagnosed with a critical illness. It gives the remaining shareholders the funds to buy back the shares from the departing individual’s estate or family, ensuring control of the business stays where it belongs.
Without this type of cover, the deceased shareholder’s family may inherit the shares and be left with a difficult decision, whether to become involved in the business, sell to an external buyer, or negotiate with the other owners, which can lead to uncertainty and disputes.
What does it include?
• A lump sum payout if a shareholder dies or suffers a critical illness (if chosen)
• A cross-option agreement (also known as a double-option agreement) to ensure a smooth transfer of shares
• Premiums typically paid by the business or individual shareholders, depending on the structure
Benefits of Shareholder Protection:
• Maintains business stability by avoiding unwanted or unexpected new owners
• Provides liquidity to buy back shares without using personal or business reserves
• Supports succession planning and protects the value of the business
• Reduces disruption to staff, clients, and other stakeholders
Oviso works with business owners to put the right cover in place, including help with trust and legal agreements where required, giving you confidence that your business can continue in capable hands.
With so many options to consider, it can seem very confusing. So, to help you out we've answered some of your most common questions. For more specific advice about the options available for your circumstances, why not get in-touch with one of our friendly advisors.
The policy provides the owners of a business with a lump sum to buy the affected individual’s share of the business in the event of them dying or being diagnosed with a critical illness, helping the surviving owners retain full control and ensure the deceased family’s estate receives fair settlement. The business owners can choose whether the policy is written on an own life or life of another basis however life of another is usually only suitable where there are just two owners, and doesn’t provide any flexibility for future business changes.
The minimum term is one year and the maximum term is 50 years. The policy must end before the person insured reaches 80 years of age.
To find out more about mortgages, personal insurance, business insurance and protection or to discuss the options available for your circumstances, contact our team of advisors
