Shareholder Protection Insurance is a specialist form of Term Assurance: It will make the necessary funds available to allow your company to buy the shares of a deceased shareholder if they die, or get seriously ill. This will put you firmly in control financially during a very difficult period. It will also allow you to compensate your deceased shareholder's dependents properly, without impacting the company financially. The cover can be surprisingly affordable.

If your co-director dies, their family will want to withdraw their share of the business's value from the company; including the value attributed to goodwill.

You might have to raise a substantial sum of money through the sale of assets or additional borrowing to retain their share.

Alternatively, your co-director's executors might sell the remaining shares to a third party, resulting in potentially unwelcome members in the boardroom or even a new majority shareholder.

The remaining shares might be retained for a period prior to sale, in which case the company will need to continue paying dividends to the executors until you or someone else buys them out.

In any case the scenario could prove very costly, and you may loose control of your company. The situation is similar for Partnerships.