The type of business protection you need will depend on how your business is set up. Shareholder Protection is suitable for companies with shareholders, whereas Partnership Protection is suitable for those in partnerships. You can simply provide life cover, critical illness cover or a combination of the two.
What is Shareholder Protection?
Share protection provides a guaranteed cash lump sum that can be used to ensure that control of the company remains in the hands of its surviving shareholders rather than passing to beneficiaries of the deceased estate. In return you can make sure the deceased estate receives the cash value of the shares.
What is Partnership Protection?
For partners in a business cover is extremely important. Partnerships may be dissolved automatically on death unless stated otherwise in a partnership agreement. Partnership Protection ensures that control of the business remains in the hands of the surviving partners.
How much protection is needed?
Each person needs cover to the full value of their interest in the business whether a shareholder or a partner.
Making it Legal
You will need to have a legally binding agreement in place which determines what happens to the interests in the business should anything happen to the insured life. Often referred to as “cross option” agreements or “buy/sell” agreements; either way we would recommend that you seek Independent Legal Advice once the policy is set up.