Put simply, shareholder protection insurance is designed to ensure that the aftermath of a shareholder’s death is a smooth and stress free as possible. It involves writing up a series of legal agreements that set out how shares are to be managed if a stakeholder passes away. Either the fellow shareholders or the company as a whole takes out insurance policies on the lives of each shareholder. Should a shareholder die, policy pay-outs can be used to purchase the shares of the deceased holder.
In today’s cutthroat world of business it’s crucial to underpin an enterprise with a safe and stable business plan. Deceased shareholders are a guaranteed way to shake up operations and seriously jeopardise the strength and unity of a business. By taking out shareholder protection insurance, shareholders enjoy the total peace of mind that should a fellow investor pass away, surviving shareholders will not have to worry about finding the money to purchase assets. Instead, they will receive pay-out funds that allow them to buy up the deceased’s shares quickly and efficiently. This means business can return to normal as quickly as possible.
Although shareholders generally have an in-depth understanding of how to leverage their assets, inheriting family members often have no idea how to manage a portfolio. Most would rather receive money as this is far more useful to them. Cash payments can also help to relieve the stress that families face when losing a key breadwinner. When taking out shareholder protection insurance, company stakeholders can rest easy that their families will receive financial compensation in the case of their death. The policies guarantee a fair buy-out price, as well as a quick, easy and stress free process.
As well as supporting fellow shareholders and family members in the case of death, shareholder protection insurance can also be used to cover serious illnesses. Given that the right agreements and policies have been put in place, a sick shareholder is able to sell shares to continuing shareholders. Should a shareholder fall ill, the knowledge that they have shareholder protection insurance will be a big weight off their minds.