Losing a shareholder can cause the biggest disruption to a firm, as redistributing shares, finding buyers and waiting for probate can cause considerable delays in production. Not having full control over the business can block surviving shareholders from making essential decisions to drive the company forward, and if ownership falls into the wrong hands, the firm may lose its direction entirely.
Shareholder protection insurance is a type of policy which, following the untimely death of a shareholder, can pay out a cash lump sum to the surviving owners to enable them to buy back the business equity of the deceased. This type of insurance allows for business continuity, providing a clear succession plan for each shareholder to enable survivors to regain control, should the worst happen. Having this type of policy in place ensures that shares aren’t tied up in probate for months on end and protects a company against hostile third parties.
Shareholder protection insurance is one of the more complex insurance products on the market. Taking out a policy requires extensive calculations and an expert understanding of the law and tax. It’s therefore essential to choose a supplier who can guide you through the process and provide an appropriate level of cover. This list offers an overview of some of the insurance providers offering shareholder protection insurance.
Finding the Right Policy & Provider
Before you begin your search for a shareholder protection insurance provider, it’s essential to be clear on your search criteria. Many businesses choose to take out comprehensive business protection insurance, which can combine a shareholder protection insurance policy with other forms of life-related covers, such as key person insurance and business loan protection. Once you’ve established the features of cover you are looking for in a policy, there are three routes to finding a supplier that ticks the boxes.
- Approaching insurers directly – One of the best ways to find out what’s on offer on the market is to approach insurers directly. Many providers have a team of expert advisers on hand to offer guidance with selecting a policy, as well as advice on a suitable type and extent of cover. Due to the complex nature of business protection insurance, many companies choose to take out a policy with a specialist life insurance provider. Indeed, many of the market leaders are specialist suppliers that exclusively sell life insurance-related products.
- Going through a broker – Shareholder protection insurance is the most complicated business protection policy in the market, with three ways of taking out a policy and complicated tax rules applying to each. From working out the value of each shareholder’s equity to the extensive legal agreements that need to be put in place, a broker’s experience and industry knowledge can be invaluable to ensure your business gets the right level of cover for a reasonable price.
- Comparison websites – As with any insurance product, the breadth of the market can be overwhelming. A helpful starting point is to consult a comparison website, which can provide an easily digestible summary of cover for various products and suppliers on the market. Most comparison websites allow you to narrow your search by applying specific criteria. However, shareholder protection insurance is a particularly bespoke product, and each insurer uses different methods to estimate a quote. It can, therefore, be difficult to generate accurate quotes and compare policies on a like-for-like basis through comparison sites.
Legal & General
Designed specifically for small businesses, shareholder protection insurance from Legal & General is available in three different forms, with level cover and increasing life insurance cover options as well as whole of life. Their life cover plans come with no maximum limit of sum insured, with up to £5 million available for whole of life protection. Legal & General also offer critical illness cover or critical illness extra for further protection.
Perks to a policy with Legal & General include the accidental death benefit which comes as standard, as well as Nurse Support Services. This service can offer varied support, from a second medical opinion to mental health care, carer support and coping strategies following diagnosis or bereavement. Companies can apply for a quote online through their website.
Vitality
Whether you’re a partnership, limited liability partnership or a limited company, Vitality can offer comprehensive shareholder or partnership cover as part of their business protection line. All Vitality customers have access to the Vitality Programme, a scheme which encourages companies and their staff to become more active and make healthy lifestyle changes in return for financial rewards, whether that’s discounted gym memberships or money off their premiums. To arrange a quote, you can speak to one of their business advisers over the phone or request a callback through their website.
Royal London
Shareholder protection insurance is available from Royal London as part of their comprehensive business protection package, alongside key person protection, business loan protection, key person replacement and life cover for employees. Their policies come with life or life and critical illness cover options.
A significant benefit to taking out a policy with Royal London is their Helping Hand service, which offers a broad range of support facilities, such as a second medical opinion from independent medical professionals, support recovering from a heart attack or stroke and grief counselling. Policyholders also receive business advice, including a recruitment helpline to source cover for key members of staff and a legal phone line to assist with employment law. Royal London’s range of business products is only available through a broker.
Aegon
One of the most flexible solutions on the market is the business protection range offered by Aegon. Customers can choose between life protection, critical illness protection or life and critical illness protection, with either level term or reducing cover. They can integrate shareholder protection insurance with key person protection, business loan protection and executive income protection. All policyholders benefit from a dedicated protection consultant to advise on a suitable policy.
Aegon’s insurance plans come with the Policy Plus facility, where clients can gain access to a personal nurse adviser for ongoing support as well as a diagnosis review and treatment. Policy Plus also includes a health and wellbeing service, which comes with counselling access and online support tools. Aegon’s products are only available through a broker or intermediary.
LV=
Share & partnership protection is one of the business protection products on offer from LV=. They can cover partnerships, limited liability partnerships and limited companies, with the option to include life or life and critical illness, which can offer cover for up to 87 conditions.
As part of a business protection policy, LV= customers have access to an extensive range of support facilities, including the LV= Business Care service designed for small businesses, offering free legal, tax and VAT advice. Policyholders can also access the LV= Doctor Services, which includes remote GP services, a second medical opinion and prescription services. On top of this, LV=’s member care line offers 24-hour access to health advice and a counselling service. Their products are available exclusively through brokers.
AIG
AIG offers a flexible shareholder protection policy which can adjust its level of cover in line with the changing financial needs of a company. Shareholders can choose between life cover or life and critical illness cover, which can protect shareholders against a diagnosis for a long list of illnesses. Policyholders can select either a specified term policy or a policy written on a five or ten-year renewable basis. All customers also have access to the Best Doctors and Smart Health services, which offer access to a second medical opinion, treatment and medical care, as well as on-demand consultations with UK GPs. You can access AIG’s products through a broker.
Aviva
Business protection is available from Aviva for a range of clients, including public and private limited companies and limited liability partnerships. Their package policies can include business loan protection and key person cover alongside shareholder protection, with the choice of life or life and critical illness cover. Companies can build a flexible policy, choosing their sum insured and policy term as well as the option to have a level cover policy or decreasing cover. Aviva’s specialist medical underwriters work together with financial advisers to create bespoke plans tailored to the needs of each business. Aviva’s products are available exclusively through brokers and intermediaries.
Scottish Widows
Companies can take out a flexible protection solution with Scottish Widows, which can offer cover limits of up to £3 million. Their policies can be arranged with life or life and critical illness cover, which provides coverage for 30 main conditions and ten additional conditions. Businesses can opt for a guaranteed insurability policy, which allows their cap to increase without further medical underwriting. All plans come with Scottish Widows Care, a service providing emotional support and long-term practical advice to employees and their families. Policyholders also benefit from free accidental death cover. Policies with Scottish Widows are only available through intermediaries.
LifeAssure (Broker)
A range of business protection policies is available through LifeAssure, one of the UK’s leading life assurance companies who can offer competitive quotes. They can arrange bespoke package solutions, with the option to include director share protection, partnership protection, shareholder protection and key person insurance. Their dedicated financial advisers can offer advice on arranging life-based insurance products with a level of cover suitable for your business. You can get in contact by making an enquiry through their website, or by phoning them directly.
Zurich
Shareholder protection insurance is available as a feature of Zurich’s comprehensive business protection policy, with the option to integrate key person cover. Customers can choose between life and life and critical illness cover, which includes protection for 40 serious conditions. There’s also the option to extend the critical illness cover using Zurich Critical Illness Select, which can cover 51 severe conditions. Policyholders have access to the Zurich Support Services, a team of independent counsellors, legal experts and advisers to support both employees and their families following a difficult diagnosis. Zurich’s policies are only available through a broker.
Macbeth (Broker)
Financial specialists at Macbeth are able to arrange bespoke policies for limited companies, partnerships and limited liability partnerships. Their family-run firm offers a personal approach to working with companies to create tailored solutions to correspond to their business needs. Their policies can cover death, terminal illness, permanent disability and critical illness, with the possibility to write cover in trust or arrange policies on a ‘life of another’ basis. You can get in touch online through their website by leaving a query with an email address or phone number.
Towergate Insurance (Broker)
Towergate Insurance, rated 4.6 out of 5 based on over 10,000 reviews, can arrange all-encompassing business protection policies. These package policies can include shareholder cover alongside business loan protection, key employee cover and life cover for employees. With access to over 300 specialist insurers, Towergate can build bespoke policies tailored to your insurance requirements, based on how many shareholders you have and the type of cover you need. You can generate a quote on their website or speak to one of their business protection advisers over the phone.
