Co Director/ Shareholder and Partnership cover have the same essential function. This is to allow the remaining Directors or Partners of a company to buy out the deceased Director’s or Partner’s share of the company from the next of kin with the proceeds of the insurance policy that was in force on the Director’s/Partner’s life.
This is hugely important as it means that the company does not have to withdraw money from the company or take out a loan to buy the deceased Director’s/Partner’s share. It also provides for the Director’s/Partner’s next of kin and avoids any potential legal proceedings.
For example, if the value of the business is €1 million and there were 2 Directors/Partners, each would be insured for €0.5 million. In the event of death, the insurance policy becomes available to the company to pay the value of the business to the deceased’s estate. Therefore, the company does not need to sell assets or raise a loan to fund the €0.5 million.
