Why Every Business Needs Shareholder Protection Insurance

Have you ever wondered what would happen if an owner or a major shareholder of a company dies? Private businesses frequently look past the the potential risks the unexpected loss of an owner or a major shareholder due to a critical medical condition or death can bring.
In fact, an article by Talk Business UK reveals that out of over 800 businesses surveyed for the “State of the Nation’s SMEs” report, more than 50 percent admitted that they have no clear instructions stated in their will or made any kind of arrangement specifying what should be done with their shares if they die.
Arguably one of the worst things that can happen to a business, the unfortunate loss of an owner can trigger a cascade of financial difficulties that may put not only the company at a vulnerable position but its people as well.
For better understanding, let’s dig deeper into the specifics of a shareholder protection insurance.
What is shareholder protection insurance?
Shareholder protection insurance guarantees that the remaining and surviving shareholders of the company will have sufficient funds to buy the deceased shareholder’s shares efficiently and immediately to continue the operation of the business. This insurance policy is usually secured either through the company or by each company shareholder and involves drawing up legal agreements that outlines the steps that should be observed in the scenario that a stakeholder passes away.
What are the benefits of securing shareholder protection insurance?
Every business, regardless of the niche or industry it is in, should have shareholder protection insurance. With this vital insurance policy in place, your business can bounce back as quickly as possible whatever happens. This also gives fellow shareholders the assurance that there will be no outsider buying out shares.
Aside from this, shareholders can have the satisfaction that their inheriting family members will receive a fair and substantial amount of financial compensation, should they decide that they do not wish to continue managing the shares. With shareholder protection insurance, a shareholder also has the option to use this insurance policy to to support serious medical conditions.
Main Types of Shareholder Protection Insurance 
There are many types of shareholder protection insurance that you can choose from to suit your needs. The most basic types are:
  • Life of another policy
  • Company share purchase
  • Own life policy 
In the United Kingdom, the nature of the business and the individual requirements of shareholders are taken into consideration. The specifics may also vary depending on the insurance provider.
To learn more about shareholder protection insurance or to speak with our insurance experts, please contact Heritage Insurance on 02392 000 959 or via email enquiries@heritageinsurances.co.uk.