The untimely demise of a business owner is, of course, very traumatic for his or her family as well as those connected to the company. One of the financial implications may be that the owner’s widow, widower or other beneficiaries will inherit the shares but may have an immediate need for money, while the surviving shareholders may want to buy the shares but not have sufficient funds available.
Shareholder protection pays out a cash lump sum when a person it covers dies during the term of the cover, which can be used by the surviving business owners to purchase the insured shareholder’s interest in the company and retain control over the running of the business.
Shareholder protection is similar to key man cover, in that the business is the beneficiary of the policy. In this instance, however, the life insurance policy (in conjunction with a suitable share purchase agreement) would help make sure control of the company is retained among the remaining shareholders or partners. It would provide a substantial cash sum whenever death occurs, allowing surviving business partners to buy the deceased’s share of the business.
As with key man cover, shareholder protection can also include critical illness cover.
PWS Group has access to all leading insurance companies and can arrange reliable and cost-effective cover.
For further information, please contact us.