Key Person Insurance
Protect the business against the financial impact of losing a key employee, covering lost profits, emergency recruitment and business disruption costs.
What would happen to your business if a key person died or was critically ill? We arrange comprehensive business protection, from key person insurance and shareholder protection to relevant life policies, safeguarding your business against the unexpected.
Most business owners insure their premises, their vehicles and their equipment, but very few protect their most valuable assets: the people who drive the business forward. Business protection ensures that the unexpected death or critical illness of a key person does not derail everything you've built.
A life or critical illness policy owned by the business on a key employee, proceeds cover lost profits, recruitment costs and business disruption.
Ensures the business doesn't end up part-owned by a deceased shareholder's family, keeping control in the right hands.
Premiums are a deductible business expense; the payout is free of income tax and National Insurance, making it significantly cheaper than personal life cover.
If a business partner dies or is critically ill, partnership protection ensures continuity and gives the remaining partners the funds to buy out the share.
Every business is different. Here are the most common business protection scenarios we help clients with across London and Kent.
Protect the business against the financial impact of losing a key employee, covering lost profits, emergency recruitment and business disruption costs.
Ensure surviving shareholders can buy out the shares of a deceased or critically ill shareholder, keeping ownership and control where it belongs.
A tax-efficient life cover policy owned by the business for directors and senior employees, premiums are a business expense and the payout is tax-free.
Safeguard business continuity if a business partner dies or is critically ill, ensuring the remaining partners can buy out the share and keep trading.
Cover outstanding business loans and personal guarantees, ensuring they can be repaid in full if a key person dies or is critically ill.
Provide personal life cover for directors through the business, taking advantage of relevant life policy tax efficiencies rather than paying personally.
We review your business structure, ownership, key dependencies and existing protection to identify the risks that need addressing.
We identify which people represent the greatest financial risk to the business and quantify the exposure in terms of lost profit or loan obligations.
We design the right policies, key person, shareholder protection, relevant life, structured correctly for tax efficiency and maximum benefit.
We manage the application and underwriting process from start to finish, liaising with insurers to obtain the best possible terms.
Policies are placed in force with trust arrangements where required, and we review them regularly as your business grows and changes.
Key person insurance is a life or critical illness policy owned by the business on a key employee or director. If that person dies or is diagnosed with a covered condition, the policy pays out to the business, providing funds to cover lost profits, emergency recruitment, loan repayments or other financial losses resulting from their absence.
A relevant life policy is a death-in-service benefit arranged by the employer for an individual director or employee. Premiums are a deductible business expense and are not subject to income tax or National Insurance for the employee. The payout is made free of income tax and NI, typically through a discretionary trust. It's usually significantly cheaper than personal life cover for higher-rate taxpayers.
Shareholder protection is typically structured using cross-option agreements alongside individual life policies written in trust for each shareholder. The cross-option agreement gives the surviving shareholders the right to buy the deceased's shares, and the deceased's estate the right to sell them, at a pre-agreed valuation. The life policy provides the funds to complete the purchase.
Relevant life policies are a deductible business expense and are not taxable benefits for the employee. Key person insurance premiums may be tax deductible depending on the purpose of the policy, if the purpose is to protect trading income, HMRC is likely to allow it as a business expense. We work alongside your accountant to ensure correct tax treatment.
When a shareholder leaves the business, their protection policy can be assigned to them personally, surrendered for its cash value, or continued by the business on new terms. The right approach depends on the circumstances, and we provide ongoing advice on policy management as your shareholder structure evolves.
The sum assured is typically calculated as 3–5 times the key person's contribution to gross profit, plus any business loans they have personally guaranteed. We carry out a full financial assessment to arrive at a defensible and appropriate level of cover, avoiding both under-insurance and unnecessarily high premiums.
Business protection only works if it fits the legal and tax structure of your company. Here is how we approach yours.
We do not operate in a vacuum. We coordinate directly with your accountant and solicitor so the protection structure aligns with the tax-efficient corporate setup you have already built.
For partnership and shareholder protection, the legal agreement matters as much as the policy. We work with solicitors who draft cross-option agreements that hold up when they are needed.
Valuations move. Director changes happen. New shareholders come in. Protection that worked at incorporation is rarely the right protection three years later. We review on a structured cycle.
Key person, shareholder, or relevant life cover, check whether your business is properly protected with a free review.
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