Running a business demands time and complex management. Often, business owners overlook the impact of a shareholder’s death or serious illness.
For financial security and business continuity, especially in private limited companies with few principal shareholders, a safety net is crucial after losing a shareholder:
– The deceased’s family might inherit shares but prefer cash.
– Other shareholders might wish to buy these shares but lack funds.
– A non-aligned individual, possibly a competitor, could acquire the shares.
The right Insurance Policy ensures enough funds are available if a shareholder dies or suffers a critical illness. This way, the company operates smoothly while compensating the outgoing shareholder or their family.
This policy allows surviving shareholders to receive funds tax-free under current laws (as of 2023/2024).
Shareholder Benefits
Continuity is vital when a shareholder dies or becomes critically ill. Shareholder Protection outlines procedures and policies to maintain control and provide necessary funds:
- It arranges fair price share transfers to surviving shareholders or the company.
- The policy funds share purchases.
- It avoids using funds reserved for other purposes.
- It prevents selling shares to hostile parties or competitors.
- All transactions happen tax-efficiently, maintaining business stability and customer and employee confidence.
The plan holds no cash value and ends when the term does. Without maintained premiums, coverage lapses.
The policy might not cover all critical illness definitions. For covered illnesses, refer to the key features and policy documents.
Taxation levels and relief bases depend on current laws and individual situations. These are not guaranteed and may change.
