Shareholder protection insurance provides the funds to buy a deceased or critically ill shareholder's shares from their estate — ensuring the remaining shareholders retain control and the outgoing shareholder's family receives fair value. We'll match you with a specialist adviser who can design the right arrangement.
Why shareholder protection matters
If a shareholder dies or becomes critically ill, their shares typically pass to their estate — which means their family could become part-owners of your business. Without an arrangement in place, this can lead to disputes, loss of control, and potentially force the sale of the business. Shareholder protection provides the funds needed to buy back those shares at an agreed value.
How shareholder protection works
- Each shareholder's shares are valued
- Life insurance and/or critical illness cover is taken out for each shareholder, for the value of their shares
- A cross-option agreement is put in place (usually drawn up by a solicitor)
- If a shareholder dies or becomes critically ill, the insurance pays out and the remaining shareholders use the funds to buy back the shares
Who needs shareholder protection?
- Limited companies with two or more shareholders
- Business partnerships where each partner holds equity
- Companies where losing a key shareholder could disrupt operations
- Any business where shareholders have families who may not want involvement in the company
What happens without it?
Without shareholder protection, a deceased shareholder's shares pass to their estate. The beneficiaries may want to sell their shares, demand dividends, or even try to influence business decisions — creating conflict, reducing your control, and potentially forcing you to find alternative funding to buy them out.