What is “Business Protection”? If you are a business owner, you may have heard of “business protection”, but what does this actually mean? The short answer is that there are different types of business protection, so let’s look at them one at a time. First, let’s look at Share Protection
What is Share Protection?
If a shareholder in a private limited company, member of a Limited Liability Partnership (LLP) or partner in a business were to die, the beneficiaries in their will may inherit their share in the business. Share Protection allows the remaining partners, shareholding directors or members to remain in control of the business following the death of a business owner.
How does Share Protection work?
In the event of a business owner dying or being diagnosed with a terminal or specified critical illness, share protection can provide a lump sum to the remaining business owners. This means that in the event of a valid claim being made during the length of the policy, the lump sum could be used to help purchase the deceased partners/shareholding directors/members interest in the business.
Why consider Share Protection?
If a business owner dies with no share protection in place his or her share in the business may be passed to their family. This means that the surviving business owners could lose control of a proportion or, in some circumstances, all of the business. The family may choose to become involved in the ongoing running of the business or could even sell their share to a competitor. A share protection policy can help avoid these issues.
Share Protection can be quite complicated, and is one of many areas where good financial advice can be of great benefit.