Shareholder Protection Insurance

Shareholder Protection – Case Studies

1. Transport Company
Four trucking executives merged their respective businesses to allow them to tender for a large contract. They were successful but in doing so they each took on additional debt and personal guarantees. We assisted with implementing life and trauma cover to ensure that the funds wee available to buy the shares should one of the business partners suffer a serious illness or death. The estate may then use the funds to pay off debt and remove the personal guarantees.

2. IT Company
The three shareholder executives came to the realisation that their IT company was successful and worth well in excess of $1 million. As equal shareholders they wanted to both protect the asset wealth they had developed and have the financial means of buying each other’s shares if required. Bizinsure provided the advice and mechanism to make this achievable. To do this we implemented life and permanent disablement insurance on each of the directors. Should any of the shareholders suffer an untimely death or significant disablement, then the insurance policy pays out to the deceased estate and the affected shareholder’s shares are distributed amongst the surviving shareholders.

3. Electronics Company
Over the years the two owners had retained earnings in their business. Their current accounts had become a substantial debt owing by the company. The owners were concerned that should one of them suffer an untimely death the obligation to payout the current account would place a significant financial strain on the business. The business did not have the reserves to honour the debt. While there is a strategy to reduce the current account exposure, the business took out life insurance to cover the debt in the short term.

4. One Man Business
We are regularly involved in assisting sole operators to protect the wealth and income stream they have created in their business. The business is the owner and anytime he or she is unable to work it significantly impacts on the business and family. As an example the web developer was utilised for his specialist skills. He both generated the sales and undertook the website implementation. The business was totally reliant on his ability to work. After reviewing the requirements of the business, its owner and the owner’s family we implemented a suite of insurance policies to provide regular income, debt servicing and financial provision for the family should the owner suffer an untimely death or major disablement.