Who creates the value?
Consider revenue, client relationships, technical knowledge, leadership and operational responsibility.
Owners · Directors · Partnerships
Business protection for the people your business cannot easily replace.
Consider how revenue, borrowing, ownership and continuity could be affected by the death or serious illness of an owner, partner or person central to the business.
Understand the exposure
A business can look resilient until one person is suddenly missing.
Business protection turns a people risk into a financial planning conversation.
The right starting point is the structure of the business, the roles it depends on, any borrowing or guarantees, existing agreements and the outcome the owners would want after a death or serious illness.
Who controls the business?
Review shareholdings, partnership interests and what the constitutional or legal agreements currently say.
What still needs to be repaid?
Include loans, director loan accounts, guarantees and commitments linked to particular people.
Business cover options
Match the cover to the financial problem.
Business protection arrangements often need insurance, suitable legal documents and input from the company’s accountant or solicitor to work together.
Key person protection
Cover intended to help the business manage the financial effect of losing someone central to revenue, operations or future plans.
- The business normally owns the policy
- The level of cover should reflect the financial exposure
Shareholder or partnership protection
May help provide funds for the remaining owners to purchase an affected owner’s interest following a valid claim.
- Suitable legal agreements are normally important
- Ownership and valuation should be reviewed together
Business loan protection
May help a business repay eligible borrowing following a valid claim involving a person connected to that debt.
- Borrowing and guarantees need to be identified
- The cover should reflect the lender and loan terms
Relevant life cover
An employer-arranged life policy for an eligible employee or director, subject to insurer, scheme and tax rules.
- Can provide death-in-service style cover
- Eligibility and tax treatment require careful checking
Useful information to prepare
Build the recommendation from the business itself.
A current view of the ownership, finances, key roles and legal arrangements helps identify where a genuine protection gap may exist.
Discuss the businessOwnership structure
Shareholders, partners, share percentages, articles, partnership terms and any existing option agreements.
Financial position
Turnover, profit, remuneration, debts and the likely financial impact of losing a key person.
Roles and responsibilities
Who holds key relationships, specialist knowledge, licences, guarantees or day-to-day responsibility.
Existing arrangements
Current policies, workplace benefits, wills, shareholder agreements and any cover required by a lender.
Business protection questions
Clarify the structure before arranging cover.
The policy owner, person insured, beneficiary, legal agreement and intended use of the proceeds all need to align.
Who can be considered a key person?
A key person may be an owner, director or employee whose death or serious illness could materially affect profit, revenue, operations, client relationships or the delivery of specialist work.
Does the business normally pay for the cover?
That depends on the type and structure of the arrangement. The business may own and pay for some policies, while ownership can differ for shareholder or partnership protection. Tax and legal advice may be required.
Is a shareholder agreement still needed?
Insurance can provide funding, but it does not by itself create a legal right or obligation to transfer shares. Suitable agreements and company documents should be reviewed by a solicitor.
How is the amount of key person cover decided?
The calculation may consider lost profit, replacement costs, contribution to revenue, outstanding borrowing and the time the business may need to recover. The approach depends on the purpose of the cover.
Is business protection tax-efficient?
Tax treatment depends on the policy, ownership, purpose and business circumstances, and rules can change. An accountant or tax adviser should confirm the position rather than tax treatment being assumed.
Take the next step
Make continuity part of the business plan.
Bring a simple outline of the ownership, key people, borrowing and existing agreements to the first conversation.
All insurance is subject to eligibility, underwriting, policy terms, exclusions and claim acceptance. Business protection arrangements may also require legal, tax or accountancy advice.