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Shareholder Protection Insurance

Shareholder protection insurance is essential for shareholders who want to retain control of their business in the event that a co-shareholder passes away. Failing to prepare for such events can have a damaging effect on business operations and could even cause a business to fail.

We explain how shareholder protection insurance works and the key considerations of these policies. Speak to a Taylor James adviser for bespoke business support in this area.

What is shareholder protection insurance?

Shareholder protection insurance enables business owners to buy shares from a co-shareholder if they pass away. At the same time, it can permit a shareholder to sell their shares to co-shareholders if they are diagnosed with a critical or terminal illness.

When a shareholder passes away, their shares in the businesses are typically passed to their estate beneficiaries. This can cause disruption to the running of the businesses, along with other potential issues.

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What is shareholder protection insurance? (continued)

Surviving shareholders may not be able to raise or borrow the funds needed to buy the shares from the beneficiaries. However, share protection insurance provides the right and the funds to buy the shares from beneficiaries at a fair and pre-determined cost.

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How does shareholder protection insurance work?

Standard shareholder protection insurance allows shareholders to buy the shares from beneficiaries when a co-shareholder passes away. Simultaneously, shareholders may be forced to purchase shares from a co-shareholder who is diagnosed with a critical or terminal illness. Adding critical and terminal illness cover into the policy is an option.

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How does shareholder protection insurance work? (continued)

Premiums are paid for a fixed term, which can be renewed. If one of the shareholders passes away, the remaining shareholders can make a claim to help them purchase their shares from beneficiaries. They have a right to buy and beneficiaries cannot prevent the sale for the pre-determined price. If one of the shareholders is diagnosed with a critical or terminal illness, they can make a claim to force the sale of their shares.

The policy must align with a shareholder agreement and there might be a need for a trust or buyback document to make them effective. There are multiple complexities that are best discussed with a financial adviser. 

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Key considerations of shareholder protection insurance

The type of policy and what it covers should be seriously considered before choosing a policy. You will also need to reconsider the policy’s suitability at the time of renewal, which is usually every five or ten years. Many other considerations are made concerning the legal implementation of the policy. 

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The pros of getting shareholder protection insurance advice

The benefits of using an adviser to choose shareholder protection insurance are:

  • The adviser can bring your attention to the pros and cons of different types of policies, not limited to cross-option agreements and buy-sell agreements.
  • The adviser can inform your decision on the level of coverage needed.
  • The adviser will provide efficiency in assessing your needs to find the most suitable market options.
  • The adviser will provide additional support concerning the legal and tax implications of a shareholder protection policy.
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Taylor James shareholder protection insurance services

You can buy shareholder peace of mind. Book a consultation with a Taylor James financial adviser to discuss all your shareholder protection insurance options.

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Call us today for a no obligation chat about planning your financial future.

Call: 0203 859 3320

Email: contact@taylorjamesfs.co.uk

Please note:

  • 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.
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FAQs

What is financial planning for businesses?

Financial planning for businesses is when a financial adviser provides advice and even brokering services for a business, typically regarding insurance and pension products for staff members. Financial planning services can make a company more attractive to talented professionals while also providing the business with additional peace of mind.

How do Taylor James advisers help businesses?

Our financial advisers help clients by first getting to know their business and its long-term goals. Our qualified advisers will then source the most suitable insurance and pension products that could be utilised by the business. Our team provides essential knowledge and recommends products based on an understanding of the company’s needs. Taylor James advisers do not pressure business owners into choosing a product that has been recommended.

What type of businesses can contact Taylor James?

Our business financial planning service is open and available to businesses of all sizes across all industries. We encourage small and medium enterprises as well as large global corporations to contact our team for support when required. Our team also offers financial planning for individuals. 

We don’t know what we need, can you still help?

Yes, Taylor James advisers take a client-first approach by getting to know your needs and preferences to recommend products. We do not work the other way around; this is to make sure you are only considered for the most suitable and beneficial products. Ultimately, this means your business does not need to know what product it needs before getting in touch – that’s our job!

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FAQs

What is financial planning for businesses?

Financial planning for businesses is when a financial adviser provides advice and even brokering services for a business, typically regarding insurance and pension products for staff members. Financial planning services can make a company more attractive to talented professionals while also providing the business with additional peace of mind.

How do Taylor James advisers help businesses?

Our financial advisers help clients by first getting to know their business and its long-term goals. Our qualified advisers will then source the most suitable insurance and pension products that could be utilised by the business. Our team provides essential knowledge and recommends products based on an understanding of the company’s needs. Taylor James advisers do not pressure business owners into choosing a product that has been recommended.

What type of businesses can contact Taylor James?

Our business financial planning service is open and available to businesses of all sizes across all industries. We encourage small and medium enterprises as well as large global corporations to contact our team for support when required. Our team also offers financial planning for individuals. 

We don’t know what we need, can you still help?

Yes, Taylor James advisers take a client-first approach by getting to know your needs and preferences to recommend products. We do not work the other way around; this is to make sure you are only considered for the most suitable and beneficial products. Ultimately, this means your business does not need to know what product it needs before getting in touch – that’s our job!