Although some small business policies might cover the owner, perhaps the founder and a key employee, it’s usually wise to think about shareholder protection as well.
Shareholder protection policies help protect the business, and thereby the security of everyone in it, if a shareholder or senior partner passes away or becomes seriously ill.
Although it’s a complex area, we’ve seen these policies in action and believe they’re well worth looking at.
To discuss this type of coverage with an expert, please contact us.
Key person insurance is an important form of business insurance. There is no legal definition for 'key person insurance'. In general, it can be described as an insurance policy taken out by a business to protect that business for potential financial losses that could arise from the death or extended incapacity of an important member of the business specified on the policy.
In the interests of financial security, business stability, and continuity - particularly for private limited companies where there may only be a small number of principal shareholders - it is important to provide a safety net following the loss of a shareholder
One of the great risks of a business partnership is that one of the partners may die or suffer a specified critical illness, with his or her share of the business passing to their beneficiaries. The safety net is a pre-arranged scheme to ensure the surviving partners have enough funds to buy out the departed partner's interest in the business.