For many business owners, running a company is a time consuming and complex affair. Attention is rarely paid to what might happen if a shareholder dies, or becomes seriously ill.
In the interests of financial security, business stability, and continuity – particularly for private limited companies where there may only be a small number of principal shareholders – it is essential to provide a safety net following the loss of a shareholder:
The correct Insurance Policy allows for sufficient funds to be available in the event of the death or specified critical illness of a shareholder. This ensures that the company can continue to operate unhindered while the outgoing shareholder or their family receive fair compensation.
It provides documentation to enable the surviving shareholders to receive the funds free of tax under current legislation (as at 2018/19).
Benefits for shareholders
In the event of a shareholder’s death or specified critical illness, one of the most important things to your business is to ensure continuity. Shareholder Protection sets out the procedures and policies to help ensure that you retain control, and have the necessary funds to do so:
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 key features and policy documents.
Information regarding taxation levels and basis of reliefs are dependent on current legislation and individual circumstances, are not guaranteed and may be subject to change.