Succession Protection

Succession Protection is a necessity for business owners/shareholders/partners to protect against the problems that are created when an owner/shareholder/partner of the business dies pre-maturely and without taking the critical steps to put their affairs in order. It will ensure that the business can successfully continue without them.

The questions ?

The solution

After evaluating your business Sucession Protection needs we will determine what the impact would be financially on your business should one of the directors/partners/members become seriously ill or die. We will offer a tailored solution in the form of shareholder/partnership protection.

What is shareholder/partnership protection?

If one of the business owners were to die or become either terminally or critically ill, shareholder/partnership protection insurance could give the remaining business owners enough money to  buy the insured partner’s or the shareholder’s interest in the business.

Shareholder/partnership protection gives business owners the financial reassurance they need to keep the business on track during an unsettling period for the owners.

The case study

The loss of a business owner can destabilize a business and result in financial difficulties for other shareholders or partners.  Shareholder/partnership protection insurance ensures the remaining partners or shareholders have the opportunity to stay in control of their business, following the death, terminal illness or critical illness of one of the business owners.

Joan Simmons is one of three shareholding directors of the Mistro Research Company.  The company is worth £1.2 million and each director owns a third of the shares in the business. Joan was only 50 years of age when she suffered a severe stroke, but made a full recovery within six months.


All three shareholding directors were advised by their financial adviser to protect their shareholdings and arranged for life and critical illness cover to be written in trust for the benefit of the other shareholders. Each of the shareholders entered into an option agreement which gave them the option of purchasing shares should the others die or suffer a critical illness. The business’s Articles of Association were also updated by the company solicitor. A critical illness claim was submitted to Joan’s insurer, who paid the claim shortly after receiving a medical report from Joan’s neurosurgeon. Proceeds of the claim were payable to the business trust and held by the trustees for the other two shareholding directors.

After making a full recovery, Joan decided she would like to sell her shareholding in the business but agreed to be employed by the firm on a part-time consultancy basis. The two remaining shareholders purchased Joan’s share of the business with the £400,000 from the business trust and each became 50% shareholders of the business.


As there was no shareholder/partnership protection arrangement in place, Joan was unable to sell her shares to the other shareholders.  Instead, she was forced to retain them and continue to deal with the pressures of business ownership.  Alternatively, she may have chosen to sell her shares to the highest bidder, which may not have been with the approval of the other two shareholders.

This is an example price based on the industry average paid in March 2015 for a five-year insurance policy, for a 46-yr old non-smoker. This case study was provided by AIG insurance company and is used as part of their marketing material.