Shareholder Protection

If you are one of a number of shareholders in a business, then you should look to protect the shares.

If your company lost a major shareholder would you be in a position to buy their shares back from the deceased beneficiaries? If not then those beneficiaries would become part owners of the business and be entitled to a share of the companies’ profits. They may also have a say in how the business was run when they possibly have no experience or involvement in the company.

With Shareholder Protection, if a business shareholder dies or is diagnosed with a critical illness (if that option is chosen) the policy provides a sum of money to the remaining business owners which they can then use to help buy the deceased or critically ill business owner’s share.

The most common way to write the policy is for each business owner to take out either a life insurance or life and critical illness policy written in trust for the other business owners. They also enter into an agreement, typically a cross option agreement. 

If one of the business owners dies or is diagnosed with a critical illness (if that option is chosen) the other business owners will receive a sum of money that can help buy that business owner’s share of the business.