This type of insurance, again, is in the interest of the company. Shareholder protection allows the company/business to ensure its smooth functioning in the event of the death or diagnosis of critical illness in one of the shareholders. Other partners or shareholders have the option of buying out the shares of the deceased person with the amount received through the insurance. Shareholder protection is one way of ensuring that the control stays with the rest of the shareholders and does not go to the deceased person’s family or the heir who may not be interested in running the business.
Benefits of Shareholder Protection
- Control is retained with the remaining partners.
- Provides funds and structure to represent the fair value at retirement or time of death.
- Brings stability and clarity to the next steps in business.
The role of the financial advisor
Which type of shareholder insurance to opt for? What is double option agreement and whether you should choose it? How much to pay for the insurance? What are the tax implications on the policy? Let these questions not bother you and your work life anymore. Get in touch with Kapil Mathur for a comprehensive financial plan that can cover all your needs.