Shareholder Protection – alternatively known as Director Share Protection, Partnership Protection or Ownership Protection – is a means of ensuring that, should one shareholder/partner in a business die, the remaining stakeholders are able to purchase their share and ensure the continued smooth running of the business.
How would your business respond should one of the owners/shareholders die or be diagnosed with a critical illness? Besides losing the valued input of that person, their share in the business may well be inherited by their family, who could have little or no interest in your business and may even sell that share to a competitor.
Shareholder Protection Insurance
With Shareholder Protection, you will be able to insure your company against such a situation, by providing a lump sum payment that will allow the remaining partners to purchase the deceased shareholder’s stake in the business. Policies can also include critical illness protection, allowing any partner diagnosed with a critical illness to immediately sell their share of the business to the remaining partners, without the stress of the other owners having to raise the financial capital.
Spectrum FA’s experienced advisors have worked with many shareholders and business owners and have helped them protect their business against the risks that a sudden death or critical illness diagnosis would have caused.
Contact Spectrum FA today for a free, no obligation review to find out how easy it could be to protect your business and its shareholders.
Spectrum FA will advise you on a range of policy options to ensure you receive cover tailored specifically to the circumstances of your businesses stakeholders.
Peace of Mind
Spectrum FA will ensure your Shareholder Protection covers all the relevant partners in your company and provides peace of mind to them, their families and your business.
Spectrum FA have access to the leading Insurers to ensure you obtain competitive premiums and exactly the level of cover you require.
Frequently Asked Questions
How does Shareholder Protection work?
Shareholder protection – alternatively known as ownership protection, stakeholder protection, partnership protection or director share protection – is a type of insurance policy that ensures that, should one member of a business partnership or a key stakeholder die, there is money available to enable to remaining partner(s) to purchase their share of the business. Provision can also be made in the event of critical illness.
Who pays for Shareholder Protection?
The premiums are usually paid for by your business, but please contact us for further guidance on this.
Why do I need Shareholder Protection?
If your business is owned by more than one partner, then it’s vital you consider Shareholder Protection insurance to safeguard your company against the death or critical illness of one of the partners. Without Shareholder Protection the usual course of action is for an individual’s share of a business to pass to their relatives or other beneficiaries on death. When this happens, the beneficiaries have two options; either to take over the deceased’s position as an owner, or realise the value of the interest by selling it. Unfortunately, neither option is without its problems.
Often, the family members or other beneficiaries have little or no prior association with your business; they may know little about what you do and nothing of how you work. Additionally their commercial experience or a multitude of other reasons could diminish their capability of fulfilling the role to the same standards as the deceased partner, causing difficulties and frustration for the remaining partners.
Should the beneficiaries wish to sell the interest to release the capital, you, as the remaining partners, may have very little influence over how the shares are sold. Even if your business is consulted, there may be difficulties in finding an appropriate buyer, which could lead to financial problems for both the family and your business, or you could find yourself working with an unwelcome new owner.
With Shareholder Protection or Director Share Protection, however, all these worries are alleviated, as the policy will ensure that, should one of the partners become critically ill or die, the capital is instantly provided in a lump sum payment that will enable the remaining partners to purchase the share of the business from the critically ill owner or from their beneficiaries, allowing you to maintain full control of the business.
How can Spectrum FA help with Shareholder Protection?
Spectrum FA have many years of experience as specialist business protection insurance advisors and have arranged shareholder protection insurance policies for many different types of business. Thanks to our expertise, we are able to help you protect the future of your business from being disrupted by the unfortunate events such as death or critical illness may have.
Our advisors are able to access the leading insurance providers and tailor the cover to fit your unique needs, so you get a bespoke service that matches your circumstances.
If you would like to find out more about Shareholder Protection via Spectrum FA, then please get in touch with us today to speak to one of the team and arrange a free, no obligation review. You can contact us by emailing firstname.lastname@example.org, by phoning us on 01279 315 013 or by completing the contact form on the website and one of our advisors will get back to you as soon as possible.
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