Protect Your Business with Shareholder and Partnership Protection
- Greg Heath
- May 19
- 2 min read
Business owners work hard to build successful companies—but what happens if a key partner dies or becomes critically ill? Without the right protection, your business could face instability, unwanted ownership changes, or serious financial challenges.
What Is Shareholder & Partnership Protection?
This is a legal agreement—often backed by life insurance—that allows remaining directors or partners to buy a deceased or critically ill owner’s shares. It ensures:
Business control stays with the surviving partners
Beneficiaries receive fair value in a tax-efficient way
Why It Matters
Without a protection agreement, you risk:
Shares passing to uninterested or inexperienced parties
Inability to fund a buyout
Potential takeover or disruption to your business
How It Works
Using a cross-option agreement, partners have the option (not obligation) to buy or sell shares. This structure:
Preserves Inheritance Tax efficiency
Enables smooth share transfer if a shareholder dies or is critically ill
Funding the Buyout
Life assurance policies are commonly used. Each partner is insured, and the payout provides funds to buy the deceased’s shares—keeping the business stable and the family compensated.
Additional Protection Options
Life Cover – Pays a lump sum on death
Critical Illness Cover – Payout on serious illness
Combined Cover – Protects against both
Relevant Life Cover – Tax-efficient cover for employees (not for share protection)
Income Protection – Regular payments during sickness/incapacity
Prepare Your Business for the Unexpected
Shareholder and partnership protection is not just about insurance—it’s about protecting the legacy, value, and future of your business.
👉 Want to protect your company and your co-owners? Contact Pecunia Financial Planning today to build a tailored action plan for your business
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