Who Are the Best UK Shareholder Protection Insurance Providers 2021?

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05-03-2021

Shareholder Protection Insurance pays out if a shareholder dies.

If this happens, the shareholders who are left use the payout to buy back the shares of the deceased / ill shareholder. This keeps them in the business and allows them to retain control of the company at what is likely to be a very tricky time.

You can opt to pay an additional premium so that the plan also pays out if a shareholder leaves due to critical illness.

Why Does This Matter?

If you’re worried about losing control of the company if one of your shareholders dies, Shareholder Protection Insurance has an important part to play.

This is because, if you or one of your fellow shareholders dies without saying exactly what should happen to your shares, they usually go to the shareholder’s family.

But the business could end up in all sorts of trouble if this happens. For example, the family might join the company as a sleeping partner, not contributing to running it but taking a share of the profits. They might even sell the shares to a competitor, which would be even worse!

Clearly, for any business with several shareholders, Shareholder Protection Insurance has a huge part to play in securing your company’s future. It’s no wonder that all of our clients want to make sure they’re buying the best policy.

However, there are lots of providers to choose from. How do you know which one is right for you and your company? That’s why we made this guide to offer insights into the best UK Shareholder Protection providers in 2021.

What Makes a Good Shareholder Protection Insurance Provider?

Here are some key points to consider when comparing Shareholder Protection Insurance:

Maximum Cover

Each provider has a different maximum benefit you can insure yourself for. This ceiling is higher for Life Insurance only compared to combined Life Insurance with Critical Illness Cover.

Many providers offer no limit at all for standalone Life Insurance. However, with others the cap could be as low as £3 million. For combined Life and Critical Illness Cover, you’ll usually get a maximum benefit of no more than £5 million.

Critical Illness Coverage

If you want to add Critical Illness Cover to your plan, it’s essential to carefully compare the coverage available.

Look at not just at the number of illnesses the policy covers but also the definitions of those illnesses. These definitions determine how easy it will be to claim for any particular condition, so a policy with robust definitions is incredibly important.

Sam Barr Worsfold, Financial Planner at Drewberry

At Drewberry, the entire business protection team has access to a specialist tool which ranks the Critical Illness policies from every insurer to see which one is most likely to pay out for an individual just like you.

Sam Barr-Worsfold
Business Protection Expert at Drewberry

Successful Claims

Most major insurers publish annual claims figures.

Don’t get too hung up on these and use them as the only measure of the strength and suitability of any one insurer. However, they can be part of the puzzle in figuring out the right insurer for you.

Online Trusts

Depending on how you arrange Shareholder Protection, you might need a trust to protect the payout from the taxman. This ensures the business / remaining shareholders get the full payout to buy back an absent shareholder’s shares if you need to claim.

If you do need to write the policy into trust, check if you can do it online. Some insurers still require paper forms and wet signatures going back and forth in the post. This is time consuming and can cause delays, especially if many shareholders need to sign.

Fortunately, rather than wasting time waiting for the post (and money on stamps!), many insurers let you do electronically. Your adviser will do this with you during the application.

Unsurprisingly, many of our clients prefer this as an easier and more convenient option.

Additional Benefits

Shareholder Protection Insurance often comes with a range of free additional benefits alongside the core insurance.

For example, common benefits often available with cover include:

  • Telephone helplines on a variety of everyday issues, such as money worries, family concerns, relationships and legal issues
  • Mental health support / counselling
  • Second medical opinion service, offering access to royleading clinicians to review a recent medical diagnosis
  • Digital GP services.

Comparison Of The Best UK Shareholder Protection Providers 2021

Aegon

Maximum Cover

  • Life Insurance only: £3.5 million
  • Life with Critical Illness Cover: £1.5 million

Critical Illness Coverage

  • Full cover for 39 conditions as standard
  • Cover for 12 additional illnesses where the payout will be the the lowerof 25% of your benefit or £25,000

Online Trusts?

Claims Paid

  • 96% of Life Insurance claims in 2019
  • 94% of Critical Illness claims in 2019

Additional Benefits

  • Second medical opinion service
  • Health and wellbeing service: Phone access to support for bereavement, emotional health, relationships, family concerns, legal issues, money worries and more
  • Mental health support via counselling and on-demand web and mobile support tools

The Drewberry Verdict

If you make a claim for one of the 12 additional critical illnesses, Aegon does not deduct this from your total sum assured, as other insurers do

No online trusts

Low maximum benefit compared to other providers

Limited additional benefits

AIG

Maximum Cover

  • Life Insurance only: £65 million
  • Life with Critical Illness Cover: £5 million

Critical Illness Coverage

AIG includes cover for shareholders’ children as well as the shareholders themselves. The policy provides:

  • Full cover for 45 conditions as standard (or the lower of 50% of the sum assured or £35,000 if a child develops the condition)
  • Additional cover paying the lower of 50% of the sum assured or £35,000 for a list of less serious illnesses (the same if a child develops the condition)
  • Cover for 10 child-specific critical illnesses, paying out the lower of 50% of the sum assured or £35,000 if your child develops such a condition.

Online Trusts?

Claims Paid

  • £48.2 million in Life Insurance claims in 2019, plus an additional £12.4 million in Terminal Illness claims
  • £30.3 million in Critical Illness Insurance claims in 2019

Additional Benefits

AIG’s main additional benefits offering is Smart Health. This provides:

  • 24 / 7 digital GP service
  • Best Doctors — offering access to second medical opinions on a complex condition or assistance with a diagnosis
  • Mental health support
  • Wellbeing services, including access to fitness and nutrition plans.

The Drewberry Verdict

Fairly low maximum benefit available

Smart Health is one of the best suites of free additional benefits available on the market

Cover for any children the shareholders have as standard. There is no extra premium for this.

Online trusts available

Total permanent disability cover is a optional extra for an additional premium

Aviva

Maximum Cover

  • Life Insurance: Unlimited for level and decreasing cover; £5 million for increasing cover
  • Life and Critical Illness Cover: £3 million (£2 million if you opt to include total permanent disability cover)

Critical Illness Coverage

  • Full cover for 42 conditions as standard
  • The option to include total permanent disability
  • Partial payouts for certain additional critical illnesses of the lower of £25,000 or your sum assured for low grade in-situ breast and prostate cancer and £20,000 or 20% of the sum assured for the other additional conditions

Online Trusts?

Claims Paid

  • 98.6% of Life Insurance claims in 2019
  • 93.1% of Critical Illness claims in 2019

Additional Benefits

  • Best Doctors — offering access to second medical opinions on a complex condition or assistance with a diagnosis.

The Drewberry Verdict

Unlimited maximum life benefit; one of the highest maximum Critical Illness benefits available

Online trusts available

Total permanent disability is an optional extra for an additional premium

Partial payouts for additional critical illnesses (except low grade in-situ breast and prostate cancer) of £20,000 or 20% of the sum assured are among the lowest in the market.

Limited additional benefits

Legal & General

Maximum Cover

  • Life Insurance only: Unlimited for level, increasing and decreasing cover
  • Critical Illness Cover: £3 million (£2 million if you opt to add total permanent disability cover under the own occupation definition of incapacity)

Critical Illness Coverage

  • Full cover for 31 critical conditions
  • Optional cover for total permanent disability, either on an own occupation or work tasks basis
  • The lower of £25,000 or 25% of the sum assured for low grade in-situ breast and prostate cancer
  • The option to cover an additional 17 conditions in full under Critical Illness Extra for an additional premium. Critical Illness Extra also pays out the lower of £30,000 or 50% of the sum assured for a further 20 conditions.

Online Trusts

Claims Paid

  • 97% of Life Insurance claims in 2019
  • 92% of Critical Illness Insurance claims in 2019

Additional Benefits

Legal & General’s main additional benefits are under its Nurse Support Services umbrella. This includes support from trained nurses on:

  • Treatment, coping strategies and bereavement
  • Second medical opinion
  • Mental health support
  • Carer support
  • Help at home after an inpatient hospital stay
  • Caring for elderly relatives

The Drewberry Verdict

Unlimited maximum Life Insurance benefit. This includes for increasing cover, the only provider in the market to offer this.

Online trusts available

Only includes two additional illnesses which trigger a lesser payout: Low grade in-situ breast and prostate cancer

To expand coverage beyond 31 illnesses the policy covers in full (plus low grade in-situ breast and prostate cancer), you must pay more to add Critical Illness Extra. Other insurers cover more illnesses than this for free.

Other insurers provide more comprehensive additional benefits

Liverpool Victoria

Maximum Cover

No maximum cover for Life Insurance or Critical Illness Cover (subject to underwriting). LV just requires you to choose a benefit that will cost at least £5 per month.

Critical Illness Coverage

  • Covers 49 conditions in full as standard, including total permanent disability on either an own occupation or work tasks basis
  • Option available to remove total permanent disability cover if you want
  • Pays the lower of 50% of your benefit or £30,000 for an additional 18 less serious critical conditions
  • Automatic children’s Critical Illness Cover for shareholders’ children from birth to a child’s 23rd birthday. This pays the lower of 50% of your benefit or £25,000 if your child develops one of the policy’s critical or additional critical conditions (except total permanent disability and Type 1 diabetes)

Online Trusts?

Claims Paid

  • 99% of Life Insurance claims in 2019
  • 88% of Critical Illness Cover claims in 2019

Additional Benefits

  • 24 / 7 access to advice in areas such as employment law / tribunal claims, health and safety and commercial / contractual disputes
  • 24 / 7 access to business tax and VAT advice in areas such as tax and VAT relief, changes to tax legislation and completing self-assessment forms

LV Doctor Services, providing these health services over the phone or via an app:

  • 24 / 7 digital GP
  • Prescription services
  • Remote physiotherapy
  • Second medical opinion service
  • Remote counselling
  • 25% discount on health MOTs

The Drewberry Verdict

Total permanent disability cover is free as standard. You have the option to remove it to reduce premiums

One of the highest number of conditions covered in full as standard

One of the highest payouts for additional critical illnesses

Free children’s cover as standard

Payout rate of 88% on Critical Illness Insurance in 2019 is on the low side

Royal London

Excellent range of free additional benefits, both for the business and individual shareholders

Maximum Cover

  • Unlimited for level and decreasing Life Insurance; £5 million for increasing cover
  • £3 million for level and decreasing Critical Illness Insurance; £1.2 million for increasing cover

Critical Illness Coverage

  • 44 conditions covered in full as standard
  • Payout of the lower of 25% of your benefit or £25,000 for a range of additional illnesses, including many less advanced cancers
  • Option to include children’s Critical Illness Cover, which pays the lower of 50% of your sum assured or £25,000 if your child develops one of 13 conditions

Online Trusts?

Claims Paid

  • 94.3% of Life Insurance claims in 2019
  • 92.6% of Critical Illness claims in 2019

Additional Benefits

Helping Hand is Royal London’s main additional benefits service. It includes access to:

  • A dedicated nurse for help with bereavement and advice on a serious medical diagnosis
  • A second medical opinion service
  • Support with recovery from a heart attack, speech and language therapy after a stroke and complementary therapies to help manage symptoms / assist with recovery
  • Career, legal and medical advice helplines

The Drewberry Verdict

Unlimited maximum Life Insurance benefit

Online trusts available

High number of critical illnesses covered as standard

Children’s Critical Illness Insurance is an optional extra for an additional premium

Scottish Widows

Maximum Cover

  • Life Insurance only: £25 million for level and decreasing cover; £15 million for increasing cover
  • Life with Critical Illness Cover: £3 million

Critical Illness Coverage

  • Full cover for 30 conditions
  • Additional cover for 10 less serious conditions, paying the lower of £30,000 or 25% of your benefit
  • Automatic children’s Critical Illness Cover, paying the lower of 50% of your benefit or £30,000 if a shareholder’s child aged under 22 develops one of the adult critical conditions or one of the five child-specific conditions

Online Trusts?

Claims Paid

  • 99.4% of Life Insurance claims in 2019
  • 93% of Critical Illness claims in 2019

Additional Benefits

Scottish Widows Care offers a nurse helpline to provide long-term practical advice and emotional support if you suffer a serious illness, trauma, disability or bereavement.

This is largely through online resources and signposting to services such as therapies, counselling, second medical opinion and practical help at home.

The Drewberry Verdict

Payout for additional critical illnesses of the lower of £30,000 or 25% of your benefit is among the highest in the market

Free children’s cover as standard

No online trusts

Limited additional benefits

Maximum Life Insurance benefit of £25 million is relatively low in comparison to other insurers

Vitality

Maximum Cover

  • Life Insurance only: £18 million
  • Serious Illness Cover: Vitality caps the total payout you can receive during the life of your plan at £3 million

Critical Illness Coverage

Vitality offers Serious Illness Cover rather than Critical Illness Cover. This encompasses far more conditions, ranking them in an order of severity to determine how much of your sum assured you’ll receive.

For the most severe conditions, you’ll receive your full benefit. For the least serious conditions, Vitality pays 5% of your benefit.

Choose between Serious Illness Cover (which covers 153 conditions) and Serious Illness Cover Plus, which covers an additional 29 conditions on top.

Online Trusts?

Claims Paid

  • 99.5% of Life Insurance claims in 2019
  • 92.9% of Critical Illness Insurance claims in 2019

Additional Benefits

Vitality’s additional benefits centre around Vitality Select, which is free with life cover. It offers discounts on certain fitness tracking devices, plus access to certain reward partners.

You can add Vitality Optimiser at an additional monthly cost, which widens the partners to many high street retailers, gyms, spas and other rewards.

Reduce your premiums by staying active and collecting Vitality points. If you earn a certain number of points through activity, you reach bronze, silver, gold or platinum status. The higher your status, the bigger your premium discount.

The Drewberry Verdict

Much higher number of illnesses covered than other providers. However, not all of them trigger the full benefit as Vitality pays out on a sliding scale based on severity.

Relatively low maximum life benefit compared to other insurers

The rewards / Optimiser program and tracking activity to reduce premiums can be complicated. Also, if you don’t engage with the program, your premiums could rise

No online trusts

Zurich

Maximum Cover

  • Life Insurance only: Unlimited
  • Life Insurance with Critical Illness Cover: £5 million (£2 million if you have total permanent disability cover on the policy)

Critical Illness Coverage

  • Cover in full for 51 conditions as standard
  • Additional cover of the lower of £25,000 or 25% of your sum assured for a further 48 conditions
  • Option to add Critical Illness Select, which pays out the lower of £25,000 or 50% of your sum assured for a further 11 conditions
  • Optional children’s cover for an additional premium, paying the lower of £25,000 or 25% of your sum assured if your child develops a critical illness, including many less advanced cancers and some child-specific illnesses
  • Further enhance children’s cover with an option for an additional premium that pays out the lower of £25,000 or 50% of your sum assured for a further 6 conditions

Online Trusts

Claims Paid

  • 99% of Life Insurance claims in 2019
  • 90% of Critical Illness claims in 2019

Additional Benefits

Zurich Support Services offers support with:

  • Childcare
  • Eldercare
  • Career coaching
  • Debt and money management
  • Legal information

The Drewberry Verdict

Unlimited maximum life benefit

Covers a high number of critical conditions in full as standard

Cover for 48 additional critical illnesses as standard is one of the highest in the market

No online trusts

Limited additional benefits

Choosing the Best Shareholder Protection Insurer…

Shareholder Protection is perhaps the most complicated protection insurance. For example, there are various different ways to set it up. The best option for your company depends on your circumstances.

While at its core it offers fairly simple Life Insurance (with the option to include Critical Illness Cover for an additional premium), there are multiple providers. Each has a slightly differently offering.

This means that even within the same company amongst the same group of shareholders, you might find different insurers best for different shareholders. That’s where Drewberry comes in. We’re here to offer the advice you need to make sure you get this protection right.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We know that our clients give so much to their businesses. They therefore deserve first class service when it comes protecting that business and their interest in it. Here are just a few reasons why it makes sense to talk to us:

For help and fee-free advice on all aspects of business protection, don’t hesitate to pop us a call. You can reach us on 02084327333 or email help@drewberry.co.uk.

Very good service from Rauri – he has been very helpful and thorough.

Kathryn Wright
16/05/2021
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