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Shareholder Protection Insurance UKProtect Business Ownership
Shareholder protection insurance funds the buyback of shares if a business partner dies
Compare shareholder protection insurance quotes. Keep your business in the right hands.
Share BuybackCross-Option AgreementBusiness ContinuityOwnership Protection
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What is Shareholder Protection Insurance?
Shareholder protection insurance provides funds for surviving shareholders to buy shares from the estate of a deceased or critically ill shareholder. It prevents shares passing to family members or outsiders.
Without Shareholder Protection Insurance
- ✗Shares pass to the deceased's family (spouse, children)
- ✗Family may want to be involved in business decisions
- ✗Surviving shareholders may not have funds to buy shares
- ✗Business disputes and deadlock can occur
- ✗Shares could be sold to competitors or outsiders
With Shareholder Protection Insurance
- ✓Surviving shareholders have funds to buy shares
- ✓Family receives fair market value for shares
- ✓Business ownership stays with remaining shareholders
- ✓Clean, agreed transfer process via cross-option agreement
- ✓Business continuity protected
How Shareholder Protection Insurance Works
1
Each shareholder takes out shareholder protection insurance on their own life
2
Shareholders sign a cross-option agreement
3
If a shareholder dies, policy pays out to surviving shareholders
4
Survivors use funds to buy shares from the estate
Shareholder Protection vs Key Person Insurance
| Feature | Shareholder Protection Insurance | Key Person Insurance |
|---|---|---|
| Purpose | Fund share buyback | Cover business losses |
| Who receives payout | Surviving shareholders | The business |
| Cover amount based on | Share value | Profit contribution |
| Requires legal agreement | Yes (cross-option) | No |
| Tax treatment | Not tax deductible | May be tax deductible |
Many businesses need both shareholder protection insurance and key person insurance for complete protection.
Shareholder Protection Insurance FAQs
What is shareholder protection insurance?
Shareholder protection insurance is a policy that provides funds for surviving shareholders to buy shares from the estate of a deceased or critically ill shareholder. It works alongside a cross-option agreement to ensure shares stay within the business.
How does shareholder protection differ from key person insurance?
Key person insurance pays the business to cover financial losses from losing a key employee. Shareholder protection insurance provides funds specifically for surviving shareholders to purchase shares, keeping ownership within the existing shareholder group.
Do I need a cross-option agreement?
Yes, shareholder protection insurance works best with a cross-option agreement. This legal document gives surviving shareholders the option to buy shares and the deceased's estate the option to sell, ensuring a clean transfer of ownership.
Is shareholder protection insurance tax deductible?
No, shareholder protection insurance premiums are not tax deductible because the policy is for personal benefit (buying shares) rather than business benefit. However, when structured correctly with business property relief, the shares may qualify for inheritance tax relief.
Get Shareholder Protection Insurance Quotes
Compare shareholder protection insurance quotes from specialist UK providers. Protect your business ownership.