Business Protection
Protecting key people and ensuring your business can continue if the worst happens
Who this is for
- You're a business owner, director, or partner in a company
- Your business would struggle financially if a key person died or became seriously ill
- You have co-owners and want to ensure shares can be bought out smoothly
- You need to cover business debts or liabilities if something happens to you
- You want to provide employee benefits like life insurance or income protection
What this cover helps with
Business protection insurance covers the financial impact on your company if a key person dies, becomes critically ill, or can't work. It ensures the business can continue, buy out shares, or cover debts without financial strain.
Key outcomes:
- The business has funds to recruit and train a replacement for a key person
- Shares can be bought from a deceased partner's estate without cash flow issues
- Outstanding business loans or liabilities are covered
- Continuity is maintained without forcing a sale or closure
- Employee benefits improve retention and morale
Cover types I personally arrange
Relevant Life Insurance
A tax-efficient life insurance benefit for directors and employees. The business pays the premium, and it's not treated as a taxable benefit. Policies pay out to the employee's family, not the business.
Additional Business Protection Services (Referral Basis)
For more complex business protection needs, I work with specialist colleagues within The Right Broker team who can help with:
Key Person Insurance
Life or critical illness cover on a key employee, director, or owner. The business is the policyholder and beneficiary. Funds help cover lost revenue, recruitment, and training costs.
Shareholder Protection
Enables surviving shareholders to buy out a deceased partner's shares. Usually arranged alongside a cross-option agreement to ensure smooth ownership transfer.
Business Loan Protection
Life insurance to cover outstanding business debts or loans. Ensures the business (and your family) aren't left with unmanageable liabilities if you die.
Partnership Insurance
Covers partnerships (e.g., solicitors, accountants) so that remaining partners can buy out a deceased partner's share without destabilising the business.
Need these services? I work with specialist advisers within The Right Broker team who can help with these more complex protection needs. Get in touch and I'll connect you with the right colleague.
Pros and considerations
Benefits
- Key person cover protects the business from financial loss if critical staff are lost
- Shareholder protection ensures ownership transitions smoothly without disputes
- Relevant life insurance is tax-efficient and improves employee benefits packages
- Premiums for some business protection are typically tax-deductible
- Provides lenders and investors with confidence in business continuity planning
- Can be tailored to cover multiple scenarios (death, critical illness, income loss)
Considerations
- Key person cover can be expensive for older directors or those in poor health
- Shareholder protection requires legal agreements (cross-option or buy-sell) to be effective
- Relevant life policies have no cash-in value and are lost if the employee leaves
- Tax treatment can be complex and may change, so professional advice is essential
- Underwriting can be intrusive for high-value key person policies
- Policies need regular review as the business and ownership structure evolve
What affects cost and acceptance
Several factors influence both the price of your cover and whether insurers will accept your application:
Insurers and options
I compare leading UK insurers that offer business protection solutions, including relevant life, key person, and shareholder cover. Some specialise in certain sectors or high-value policies. I'll help you navigate the options and tax implications.
Important: Availability and suitability vary based on your individual circumstances, health, and requirements. I'll recommend what fits you best after understanding your specific situation.
Frequently asked questions
What is key person insurance and do I need it?
Key person insurance pays the business a lump sum if a critical employee or director dies or becomes seriously ill. You need it if losing that person would significantly impact revenue, operations, or the ability to secure loans.
How much key person cover should we have?
Common approaches include 5-10 times the key person's salary, or an estimate of lost profit and recruitment costs. I'll help you calculate a realistic figure based on your business model and financials.
What's the difference between key person and shareholder protection?
Key person insurance pays the business to cover operational losses. Shareholder protection provides funds for surviving owners to buy out a deceased shareholder's shares, avoiding family members becoming unwanted co-owners.
What is relevant life insurance and how is it different?
Relevant life is a tax-efficient life insurance benefit for directors and employees. The business pays the premium (usually tax-deductible), and it's not a taxable benefit for the employee. The payout goes to the employee's family, not the business.
Do we need a legal agreement for shareholder protection?
Yes. Shareholder protection works alongside a cross-option or buy-sell agreement, which legally obliges the sale and purchase of shares. Without this, the insurance payout may not achieve the desired outcome. Your solicitor can draft this.
Are premiums for business protection tax-deductible?
Key person and relevant life premiums are usually deductible as a business expense. Shareholder protection premiums typically aren't. Tax treatment is complex, so check with your accountant for your specific situation.
What happens if a shareholder leaves the business?
Shareholder protection policies are typically owned by the remaining shareholders, so they continue. However, the departed shareholder may lose their own cover unless they have a personal policy. Regular reviews are important.
Related guides
Let's make sure you're covered properly
I'll search the whole market, explain your options in plain English, and help you make an informed decision. No pressure, no jargon.
Please note: The information on this page is for general guidance only and does not constitute personal advice. Your individual circumstances, health, and requirements will determine what cover is suitable and available to you.
The Right Broker Ltd is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. (FCA number 715860).