It is an insurance policy that gives business owners the peace of mind that should a business partner pass away the funds required to buy their shares will be quickly made available. It also gives shareholders the comfort that if they were to die their family will receive fair financial compensation.

Shareholder Protection can also include critical illness cover. If owners have critical illness cover it allows them, if they are seriously ill, to decide if it is a good time to leave the company and therefore enables them to sell their shares.

It is essential that Shareholder Insurance is aligned with the company’s articles of association and the shareholder agreement which should set out the buying and selling rights of shareholders. It should also set out how the shares will be bought back and at what price. 

There are a number of ways of writing the Shareholder Protection policies but the most common is to set up a life (or life and critical illness) policy for each shareholder put into trust with their co-shareholders as beneficiaries. The cost of the cover will vary for each shareholder depending on the value of the shares they own, their age, health and other factors.

When putting a Share Protection arrangement in place, it’s important to think about how you will value the business. When you take out the policy, make sure there is sufficient cover at the outset to enable the other owners to buy the shares. You will also need to review this regularly to ensure that the value of the policy keeps pace with the value of your business. 

Pangea life are a specialist Business Protection brokerage so whether you are needing to review an existing policy, or are thinking about taking out a policy for the very first time, you will be in great hands.

We work with all the leading and insurers in the UK, have a full understanding of the differences between each of their offers and underwriting requirements, ensuring you get the policy that is right for you and at the best rate available.

If you have any questions about Shareholder Insurance or even want to find out about other business protection insurances i.e. Key Person Insurance and Debt Protection complete the contact form or give us a call Monday to Friday between 9am – 5pm 

on 02382 354 354.

From small scale two-person enterprises to multi-national businesses with multiple owners, shareholder protection insurance is a must have policy. As well as ensuring the stability and ownership of the business, protection also offers the peace of mind that shareholders and their family members will be looked after if the worst happens.