Every year, thousands of New Zealand businesses face unexpected disruption when a shareholder dies, becomes terminally ill, or can no longer work due to medical reasons.
Without proper protection, these events can force emergency sales, unwanted partnerships, or even business closure.
For many business owners, we recommend two key forms of insurance
Co-shareholder insurance ensures the business has the cash to fund a buyout - so shares stay with the surviving owners and business operations stay uninterrupted.
Shareholder Insurance comprises of two products:
Life Insurance - You put life insurance on the owners based on the value of their shares in the business. In the event the owner dies, the remaining shareholders use the life insurance to buy out the estate of the deceased.
Total & Permanent Disability - In most situations, you want the option to buy out an owner's shares if they are not able to work in the business. If an owner is permanently disabled and cannot return to work, the remaining shareholders use the insurance to buy out the shareholder.
Key Person Cover provides temporary financial support if a key employee or owner can’t work due to illness or injury. It is similar to income protection, where once the waiting period ends, the business receives a monthly payment until the key person returns to work.
It’s designed for businesses that rely on one or more individuals for core functions like sales, operations, or client relationships — where the absence of any one of them would cause serious financial disruption.
The monthly payments help maintain cashflow, cover fixed costs or fund a temporary replacement. It’s a short-term solution (up to 2 years) that keeps the business stable while key people recover or longer-term plans are made.
Everyone agrees upfront what the business is worth and what each share represents. This removes emotion and conflict from future decisions. While values may change over time, having a baseline prevents disputes when stress is high.
When a trigger event occurs, money appears within weeks - not months or years. No loan applications, no selling assets, no begging family for funds. The insurance company simply pays the agreed amount.
The affected shareholder (or their family) receives full value for their equity immediately. No waiting for the business to be sold, no accepting lowball offers, no ongoing involvement in a business they can no longer contribute to.
Remaining owners get full control without unwanted partners. Staff stay confident, customers remain loyal, suppliers continue trading. The business keeps operating while ownership transitions smoothly.
When structured correctly (as outlined below), proceeds flow directly to where needed without creating unnecessary tax obligations or creditor exposure.
Ensuring they’re supported without having to navigate the complexities of a business they’re not involved in.
Everyone agrees upfront what the business is worth and what each share represents. This removes emotion and conflict from future decisions. While values may change over time, having a baseline prevents disputes when stress is high.
When a trigger event occurs, money appears within weeks - not months or years. No loan applications, no selling assets, no begging family for funds. The insurance company simply pays the agreed amount.
The affected shareholder (or their family) receives full value for their equity immediately. No waiting for the business to be sold, no accepting lowball offers, no ongoing involvement in a business they can no longer contribute to.
Remaining owners get full control without unwanted partners. Staff stay confident, customers remain loyal, suppliers continue trading. The business keeps operating while ownership transitions smoothly.
When structured correctly (as outlined below), proceeds flow directly to where needed without creating unnecessary tax obligations or creditor exposure.
Ensuring they’re supported without having to navigate the complexities of a business they’re not involved in.
Many business owners assume co-shareholder insurance must be expensive. The reality often surprises them – especially when compared to the potential financial devastation of not having it.
Two business partners, mid-40s, non-smokers, good health:
Business value: $2,000,000 (each owns 50%)
Cover needed: $1,000,000 per person
Weekly premium: Approximately $40 per person
Total weekly cost: $80 (usually paid by the business)
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