Shareholder/Partnership Protection

One of the great risks of a partnership or limited company is that one of your colleagues may die. Aside from the emotional distress caused by such an event, the surviving business partners may find themselves facing an uncertain future regarding the running of the business going forward.

If a contingency plan has not been put in place to plan for such an eventuality, it may be that the deceased’s share of the business passes to one of their family members; who may have little interest in the business or be unable to meet the requirements of running the business.

Share or partnership protection provides an agreement between shareholding directors or partners in a business in the event of death of an individual. The agreement is backed by a life assurance policy which, together, aims to ensure that the control of the business is retained by the remaining partners or directors.

Particularly pertinent for businesses with owners that are unconnected (ie. not family members), shareholder / partnership protection provides a business with a cash lump sum if a business owner dies or suffers a severe illness. This lump sum ensures that the capital is available to enable the surviving business owners to purchase the outstanding shares. The value realised by such policies ensure the deceased’s interest in the business is passed to their chosen beneficiaries and in the most tax efficient manner possible.

Equally a partner or shareholder who suffers a serious illness may not want to continue in the business after treatment. Critical illness cover on such a policy can ensure that in such unfortunate circumstances, the business owner would be compensated for their exit.

For further advice in relation to insurance for your business, including key person protection and/or shareholder protection, please get in touch with us.

  • Keyman Protection

    The death or prolonged illness of a key employee can put your business under financial strain. Keyman insurance compensates a business for the financial loss brought about by death or long term illness of a key employee.

    It provides a valuable cash injection to the business which can help with a potential loss of turnover and/or to provide funds to replace the key person.

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