In businesses with more than one shareholder or partner, losing a co-owner through death or critical illness can be more than an emotional blow — it can put the company’s future at risk. Who gets their shares? Can the business afford to buy them? What if they go to someone outside the business?
Shareholder Protection Insurance provides a tax-efficient way to ensure the business — or the surviving shareholders — can buy back the shares of a deceased or seriously ill shareholder, keeping control within the business.
At Mortgage Knight, we work with businesses to set up clear, effective shareholder protection arrangements, combining life cover with legally binding agreements — so everyone knows where they stand if the worst happens.
Ltd companies with 2 or more shareholders
Partnerships and LLPs (via partnership protection)
Owner-managed businesses that would be vulnerable if an owner were lost
Companies with external investors or complex ownership
Directors or partners who want clear succession planning
Three co-founders of a digital agency had shareholder protection in place. When one tragically died in an accident, the policy paid out £300,000 to his partners, allowing them to buy his shares and continue the business, while providing fair value to his family.
A manufacturing business added critical illness cover to its shareholder protection. When one director suffered a heart attack and could no longer work, the policy paid £200,000, allowing a clean exit without debt or dispute.
Ans: It depends on the structure — policies can be owned by the individual (under a trust), the business, or on a “life of another” basis. We’ll guide you on what works best.
Ans: It’s a legally binding document that ensures if one shareholder dies or becomes critically ill, the others have the option to buy, and the estate has the option to sell. It protects all parties.
Ans: Yes, many businesses include CI cover, so shares can be bought back if a shareholder is alive but no longer able to work due to serious illness.
Ans: Typically, enough to cover each shareholder’s equity stake in the business — we’ll work with your accountant to help calculate this and adjust it as the business grows.
Ans: You risk shares being inherited by a spouse, sold to outsiders, or disputed. Shareholder Protection gives you cash, clarity, and control when it matters most.
Ans: Generally, yes, but tax implications depend on structure. We’ll liaise with your accountant to ensure everything is compliant and efficient.
You’ve built something together — don’t risk losing control if one of you is no longer there. Shareholder Protection ensures continuity, fairness, and financial security for all involved.
Speak to Mortgage Knight today to put a plan in place that protects your business and your legacy, with expert advice from people who understand both sides of the table.
