Shareholder protection insurance

Purchase a plan that protects all shareholders in a private limited company or partnership if a shareholder passes away or becomes critically ill.

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Get a shareholder protection insurance quote

Our independent shareholder protection advisors are on hand to answer any questions you have and help you find a policy. We’ll aim to find you the right policy for your needs at the most competitive price for you. Provide us with some contact information, and a member of our team will be in touch.

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What is shareholder protection insurance?

Shareholder protection insurance aims to provide a safety net for all shareholders in the event that a member passes away or if they’re diagnosed with a critical illness (when included in the cover). If a shareholder passes away, in many cases, their shares will be inherited by beneficiaries, such as their spouse or child. If this happens, it may pose a risk to the company and the other shareholders for several reasons, such as the new shareholder having differing views and interests from the existing stakeholders.

Shareholder protection insurance aims to reduce this risk by putting in place plans for shareholders to buy and sell shares and providing surviving shareholders with a cash lump sum to purchase the remaining shares. Each shareholder will take out a plan on their own life which is then written into a trust for other business owners to ensure a smooth transition. This set up aims to keep control of the shares between the existing shareholders.

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How does shareholder protection insurance work?

By purchasing a shareholder protection insurance policy, shareholders may receive a cash lump sum that can be used to buy the shares belonging to a deceased shareholder. However, the policy may also enter these shareholders into agreements that sets out what should happen if they pass away. There are several types of agreements that can be instated, each offering a unique solution:

Cross option agreement

An agreement between the shareholders which is backed by a trust. If a shareholder passes away, the remaining shareholders and the share inheritors have the right to buy or sell the shares. This means that if either party wants to purchase or sell, the others must comply. Cross option agreements may include a set time period after a shareholder’s death where this right must be exercised.

Buy and sell agreement

All owners agree that if any of them pass away or retire, the remaining owners must purchase the shares. This option may be liable for inheritance tax due to the loss of business property relief.

Company buyback

If a shareholder passes away or retires, the company will cancel their shares, and the number of shares of the company will reduce. Company buyback agreements may have additional legal requirements and take longer to resolve compared to other agreements.

Automatic accrual

If a shareholder passes away, their shares are automatically transferred to other shareholders. Automatic accruals are more commonplace in partnerships where there are fewer shareholders to redistribute shares to.

What are the benefits of shareholder protection insurance?

Peace of mind for shareholders that there are plans in place to protect them and the business if the worst happens.

Shareholders will receive a cash lump sum that can be used to purchase the remaining shares rather than paying from personal or company funds.

The beneficiaries of shareholders who pass away will have arrangements in place that they can utilise after inheriting shares.

Shareholder protection insurance provides clarity for existing and prospective shareholders over what happens in the event of death. This may instil confidence and help to attract investment.

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How much does shareholder protection insurance cost?

Every business is different, and how much a shareholder protection policy will cost you depends on many factors. When you contact us, we’ll find out all of the relevant information we need to know to compare your options and provide you with information about the cost. Some of the factors that will influence how much you pay include:

Insurance broker and customers negotiating a policy.
1.
Age of shareholders
2.
Lifestyle habits
3.
Occupation
4.
Medical history
5.
Current health status
6.
The amount of cover
7.
Additional cover, such as critical illness
8.
Length of the cover

How much cover do you need?

Purchasing the right level of cover will ensure that any payouts are sufficient for the remaining shareholders to purchase the deceased person’s shares. To calculate the level of cover you need, you should estimate the current value of each shareholder's position. Our advisors can help you with this process when comparing the policies for you.

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Compare shareholder protection insurance policies

We offer an independent comparison service for any company or group of shareholders considering shareholder protection insurance. We aim to offer an unbiased service that results in you purchasing the most suitable and cost effective policy that meets your needs. To get started, provide us with some contact information, and we’ll be in touch.

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0800 970 1618
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What our providers have to say about shareholder protection insurance

"Having an added level of security for all shareholders can be a lifeline for companies. The passing of any shareholder is always difficult, but having arrangements in place can help to make the handover process easier for all parties involved"

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Key person insurance FAQs

How many shareholders are needed for this insurance?

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What happens if an insured shareholder leaves?

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How can I purchase shareholder protection insurance?

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Why choose Premier Choice Group?

Personal market analysis

Our team will personally review your options

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Free comparison service

Our no obligation service is entirely free

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Independent advice

Our advice is always unbiased and impartial

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Fair analysis

We aim to offer a fair analysis of policies available on the market

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Single UK-based contact

A UK based company providing a nationwide service

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Qualified advisors

Authorised & regulated by the Financial Conduct Authority

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Helping you to protect your business

Key Person

Key Person

Protect your business from the loss of an employee who is essential to your company’s ability to operate or generate revenue.

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Relevant Life

Relevant Life

Cover individual employees against their death or a critical illness diagnosis and provide financial support to their dependents.

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Critical Illness

Critical Illness

Receive a cash lump sum if you’re diagnosed with a critical illness to help with your own and your dependent's financial commitments.

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Executive Income

Executive Income

If an employee is unable to work due to injury or illness, executive income protection can provide financial support to cover some of the associated costs to the employee and business.

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Income Protection

Income Protection

If you’re unable to work through injury or illness, receive financial support for your ongoing payments, such as loans, mortgages and day-to-day expenses.

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