Ask the Expert – Shareholder Insurance

What is shareholder protection insurance?

Shareholder protection provides a tax free payout so if a shareholder deceases, the shares can be purchased by the company owners, under terms of the shareholder agreement.

What are the benefits of shareholder protection insurance?

It ensures that other shareholders can purchase the shares, meaning that there is minimal disruption to the company. It closes the door to third parties sitting on the board like the deceased members spouse.

Is shareholder insurance tax deductible?

The premiums are tax deductible as they are used wholly and exclusively for business purposes.

What are the three main types of shareholder insurance?

  • Life of another policy- this policy gives each owner in the business their own policy, with an individual premium. If one member deceases a pay out is made from their policy to the surviving shareholder(s) so they can purchase the shares.
  • Another option is for shareholders to have their own policy, but it is written in the form of a business trust, meaning when one person dies the payout is equally shared among the remaining shareholders.
  • The final main type of shareholder insurance is that the company can buy the policy and pay premiums for the policy and the business will receive a pay out when the shareholders dies.

How much does shareholder protection insurance cost?

The price is dependent on a variety of factors such as how long the policy is taken out for, you need to calculate how long you think staff member will work for the business and how much they would cost to replace. As well as factors such as age, gender, occupation type, if the individual smokes and health and medical conditions.

What information does BDfSO require to provide quotes for shareholder protection insurance?

Information that BDfSO require would be age, gender, DOB, address and postcode, occupation and position in the company, salary, purpose for cover, number of people in the firm, number of people being considered for cover and why, whether the company is sole trader, Ltds, LLP or PLC