Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacy & cookie policy.
Shareholder Protection Insurance pays out a cash lump sum if an insured shareholder dies or suffers a terminal illness (diagnosed with fewer than 12 months to live). The cash lump sum enables the surviving shareholder(s) to buy back the shares from the beneficiaries of the deceased shareholder.
Adding Critical Illness Cover means the plan also pays out if the shareholder becomes critically ill (for example, with cancer, heart attack or stroke).
In this guide we cover…
You will also be able to obtain instant online quotes comparing prices from Aviva, Vitality and other top UK insurers 😎
Research from Legal & General shows…
If a business partner dies without making a decision on what should happen to their shares, those shares usually go to their estate. They will subsequently pass to their family, who then have two options:
Neither of these options is problem-free. Problems could include:
The table below lays out the risk of a company director dying before age 65. Try our Life Expectancy Calculator to work out your own risk of death over a given period 😵
Risk of Death by Age 65 | |
---|---|
35 Years Old | 1 in 13 |
45 Years Old | 1 in 11 |
55 Years Old | 1 in 9 |
Around 80% of Critical Illness claims are for cancer, heart attacks and strokes.
IMPORTANT NOTICE 🧐
Critical Illness Insurance won’t cover every case of the above conditions. Less severe cases may not be included in your policy wording or only trigger a partial payout. Check definitions carefully or ask your adviser for help in this area.
The cost will vary depending on your needs. However, some factors which contribute to premiums are easier to control, including:
There are other factors which impact the cost that you have less control over, for example your:
In the table below, we’ve used our online calculator to work out the monthly cost of Shareholder Insurance with Life Insurance and with Life Insurance with Critical Illness Cover.
Each premium is for a healthy non-smoker wanting £150,000 of level cover that will remain fixed across the policy term.
Age
|
10 Year Policy
|
---|---|
Premium Calculator: Life Insurance Only
|
|
Age 35
|
£7.10
|
Age 45
|
£12.66
|
Age 55
|
£26.78
|
Premium Calculator: Life & Critical Illness Cover
|
|
Age 35
|
£32.56
|
Age 45
|
£72.21
|
Age 55
|
£158.57
|
Valuing a limited company or partnership for any reason, including Shareholder Protection Insurance, can be tricky. It will very much depend on a variety of different factors.
There’s no tried and tested method of valuing a company. This is because each business is different, even those within the same industry. That’s where the expertise of an adviser can be invaluable.
An adviser will look at a number of factors when valuing your firm to decide how much shareholder protection you need. Some of these factors include:
Different industries will often command different values, even if underlying business metrics are similar. Intangible factors will also play a part, such as the company’s reputation and relationship with clients.
Firstly, premiums and the payout are usually subject to a range of taxes depending on the circumstances of you and your company. Taxation also depends on how you set up the cover in the first place. We therefore recommend you get specialist advice.
IMPORTANT NOTICE 🧐
As always when it comes to taxes, it’s best to consult your solicitor and accountant before doing anything that might cause a tax liability later on.
There are three ways to buy Shareholder Insurance:
Each option has its own tax position — read more on how HMRC taxes it here.
Own life under business trust policies may require you to equalise premiums if you and your fellow shareholders decide to each pay the premiums for the policy yourselves.
This is to stop HMRC seeing unequal premiums as a ‘gift’ or ‘transfer of wealth’ to the shareholders paying the most to those paying the least. If HMRC decides this is the case, it could have inheritance tax implications in the event of a claim.
This depends on how you set it up. Each of the above three ways listed on how to set up cover will impact whether it is a P11D / benefit in kind — read more here.
This is a legal document which, on the death of a shareholder, provides the option for the other shareholders to buy the shares (‘call’ option) and the option for the deceased’s family to sell (‘put’ option).
It’s essential that the company’s articles of association give both parties the option to buy / sell the shares rather than an obligation. An obligation to sell the shares could result in an inheritance tax bill as this may disqualify the shares from business property relief (BPR).
We work with all the best UK Business Protection Insurance providers. Below is a list of the major insurers we’ll get quotes from to achieve the most competitive terms:
Most of the top insurers now provide a number of benefits alongside the core policy, which might include:
There are also other business protection policies that can work alongside Shareholder Protection Insurance. For example you may wish to think about:
Shareholder Protection is the most complex of the policies under the business protection umbrella. We don’t recommend a DIY approach — the tax position alone is a bit of a minefield.
While it’s possible to set up Shareholder Insurance yourself, to do so you’ll need to consider:
Shareholder Protection can be difficult to get your head around when there are multiple owners with different holdings. Moreover, there are various ways of structuring the term assurance.
Thats why we have a team of business protection experts on hand to make sure you set up your cover correctly with the most competitive terms.
We started Drewberry™ because we were tired of being treated like a number.
We all deserve a first class service when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.
If you need help protecting a shareholding please don’t hesitate to give us a call on 02074425880 or email help@drewberry.co.uk.
The staff have been very knowledgeable and I have enjoyed working with Nadeem on setting up our plan.
Or call us on 0208 432 7333
Drewberry™ uses cookies to offer you the best experience online. By continuing to use our website you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacy & cookie policy.