The controlling directors in your business are its driving forces and the foundation for its success. So what would happen if one of them was no longer here? Imagine that the shares of one of your co-directors ended up in the hands of somebody you don’t know, and who does not know anything about your business. This could be exactly what happens if one of your co-directors becomes seriously ill or dies - their share in the business could pass to somebody else through either sale or inheritance.

To avoid the risk of shares in your business passing to the wrong person, you need to establish a legal framework that gives the remaining controlling directors the right to buy out the shares of any director who becomes seriously ill or dies. This will help to ensure the business remains in the right hands and that any dependants receive the financial value of the shares.

However, while a legal framework can ensure that you have the right to buy, it cannot ensure that you have the money you need to exercise that right and this is where life assurance and critical illness covers can come in.

A life assurance plan pays out a lump sum if the person who is covered dies, a critical illness plan does the same if they are diagnosed with one of the critical illnesses covered. By taking out these plans to cover all the controlling directors in your business you will receive the lump sum when you need it.