Maintaining Control
Prevent the deceased shareholder's family from becoming unwilling business partners. Buy out their shares at fair value while keeping decision-making with people who understand the business.
Shareholder Protection
When a shareholder dies, their shares pass to family members who want cash, not business involvement. Shareholder protection insurance provides the funds to buy them out.
The plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
The policy may not cover all definitions of a critical illness. For definitions of illnesses covered please refer to the Policy Documents.
Shareholder protection insurance guide
Most private limited companies have just a few key shareholders. When one dies, their shares pass to spouses or children who typically want immediate cash rather than ongoing business involvement. Without funds to buy them out, surviving shareholders can lose control to people who don't understand or care about the business.
Types of shareholder protection insurance available
- Own life cover where each shareholder insures themselves for other shareholders' benefit
- Cross-purchase arrangements where shareholders insure each other's lives
- Company purchase structure where the business owns and benefits from the policies
- Critical illness addition covering serious conditions like cancer or heart attack
- Level cover where the payout stays the same throughout the policy term
- Decreasing cover where the payout reduces over time to match reducing company loans
Each shareholder takes out life insurance on themselves, written in trust for the benefit of the other shareholders. When someone dies, their policy pays out to fund the purchase of their shares from their estate.
The company itself owns life insurance policies on all shareholders. When a shareholder dies, the company receives the payout and uses it to buy back the deceased's shares, which are then typically distributed among surviving shareholders.
Adds cover for serious conditions like cancer, heart attack, or stroke. Allows surviving shareholders to buy out a colleague's shares if they're diagnosed with critical illness and want to exit the business for health reasons.
Essential legal framework that gives surviving shareholders the right to buy the deceased's shares and gives the deceased's family the right to force a sale, ensuring fair treatment for all parties involved.
Common reasons for shareholder protection
Fair Family Compensation
Give the deceased shareholder's family immediate cash rather than forcing them into business ownership they don't want or understand, while protecting their financial interests.
Business Continuity
Ensure the company continues operating smoothly without disruption from family members who may not share your vision or have any interest in the industry.
Avoiding Forced Sales
Prevent having to sell company assets or take on debt to fund a share buyout during an already difficult period following a shareholder's death or serious illness.
How we help
We understand that financial decisions feel heavy because they affect everything that matters to you. Our job is to make them lighter, clearer and easier.
Testimonials
Trusted by companies who plan ahead
We've helped private limited companies maintain control while ensuring fair treatment for departing shareholders' families.
How can we help protect your company?
Ready to secure control?
We'll help you structure protection that works for your shareholding arrangement.