Both Shareholder and Partnership protection have the same essential function.  This is to allow the remaining Directors or Partners of a company to buy out the deceased Partner’s share of the company from the next of kin with the proceeds of the insurance policy that was in force on the Partners/Directors behalf.

For example, if the value of a business is €1.5 million and there were 3 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 business does not need to sell assets or raise a loan to fund the €0.5 million

This is hugely important as it means the company does not have to withdraw money from the company or take out a loan to buy the deceased Partners/Directors share. It also provides for the partners/directors next of kin and avoids any potentially dangerous legal proceedings.