Safeguarding your business with shareholder protection insurance could be the best decision you ever make. This is a matter that could affect the livelihood of several important people: your employees, family, and fellow stakeholders.
What is shareholder protection insurance?
If a shareholder in your business dies or become critically ill, the policy will pay out a lump sum to your business to ensure that the succession planning process is as smooth as possible.
The remaining shareholders will be able to buy back the shares, keeping control of the business.
Also, the deceased shareholder’s family will have the chance to monetise shares in the business.
Formalising an agreement in such a way offers peace of mind not only to fellow stakeholders but also to family members.
What are the policy options?
There are two:
As a shareholder, you can take out your own individual shareholder insurance which will last until you retire,
Your business can take out policies on each of the shareholders, enabling it to buy back the shares from the deceased by means of a trust to sell to the other shareholders.