Business insurance
Business Protection Insurance
cover that protects the business if a key person or an owner dies or becomes seriously ill
Life and serious illness cover set up for a business: to replace a key person, buy back an owner’s share, repay business loans or provide a benefit for staff.
- Key person and shareholder cover
- Relevant life and loan protection
- Companies and partnerships
- FCA authorised and regulated
Quick answerBusiness protection insurance pays out if someone the business depends on dies or, with the right cover, is diagnosed with a serious illness. It includes key person cover, shareholder and partnership protection, relevant life cover and loan protection. The money can replace lost profit, repay debts or buy back an owner’s share. Tell MyMoneyComparison.com about the organisation once, and specialist UK brokers can come back with quotes.
This page is about protecting the business against losing a person. Damage to premises and equipment sits on property cover such as office insurance, and cyber attacks on cyber insurance. Our guide to how business protection works goes further.
At a glance
Business Protection, in Brief
Six things that decide how business protection works, before any of the detail.
- Key people
- Cover for the loss of someone the profits depend on
- Owners’ shares
- Money to buy back a share if an owner dies
- Business loans
- Cover to repay debts a person guarantees
- Serious illness
- Critical illness cover can be added
- Set up matters
- Trusts and agreements decide who receives the money
- Staff benefits
- Relevant life cover for employees and directors
The basics
What Is Business Protection Insurance?
A group of life and serious illness policies arranged for a business rather than a family. Each type answers a different question about what happens if someone important is no longer there.
Key person cover
Pays the business if someone vital to its profits dies or becomes seriously ill.
Shareholder protection
Gives remaining owners the money to buy a deceased owner’s shares.
Partnership protection
The same idea for partners in a partnership or LLP.
Relevant life cover
A death-in-service style benefit for an employee or director.
Loan protection
Repays business debts if a guarantor or owner dies.
Executive income protection
Replaces part of a key employee’s income during long illness.
How it works
How Does Business Protection Insurance Work?
You decide what the business needs protecting, set the amount and term, and the insurer asks about the health of each person covered. How the policy is set up decides who receives the money.
You decide what needs protecting
Profits that depend on a person, an owner’s share, a loan, or a benefit for staff.
You set the amount and term
Based on the value at risk and how long the business needs cover.
The insurer assesses each person
Age, health, lifestyle and smoking, with medical questions or checks.
The policy is set up correctly
Owned by the business, by individuals or in trust, with any agreement between owners.
What it covers
What Does Business Protection Insurance Cover?
Death, and with the right cover serious illness, of the people the business depends on. What is paid, and to whom, depends on the type of cover.
| Type | Who receives it | What it is for |
|---|---|---|
| Key person cover | Paid to the business | Replaces lost profit or recruitment costs |
| Shareholder or partnership protection | Paid to the remaining owners | Funds the purchase of a share |
| Relevant life cover | Paid to the employee’s family | A benefit arranged by the employer |
| Loan protection | Paid to repay the debt | Covers loans a person guarantees |
| Critical illness | Added to any of the above | Pays on diagnosis of a listed condition |
| Executive income protection | Paid to the business | Funds a key employee’s income while ill |
Tax treatment depends on the set-up. How premiums and payouts are treated for tax varies with the type of cover and how it is arranged, so it is worth discussing with an accountant.
Exclusions
What Business Protection Insurance Does Not Include
Non-disclosure, conditions outside the policy’s definitions, and some causes set out in the policy. Property, cyber and liability risks sit on other policies.
Undisclosed health or lifestyle
Not answering medical questions fully can affect a claim.
Conditions outside the definitions
Critical illness pays only for listed conditions as defined.
Specific exclusions
Some policies exclude certain causes, sometimes for an early period.
Property and equipment
These need property cover.
Cyber and liability claims
These need their own policies.
Cover after the term ends
Term policies pay only within the term.
Types
Which People and Risks Can Be Covered?
Several types, often combined. The structure of the business and who it depends on decide which fit.
Key person cover
Life or critical illness cover on a vital individual.
Shareholder protection
For limited company owners.
Partnership protection
For partnerships and LLPs.
Relevant life cover
For directors and employees.
Business loan protection
For guaranteed or business debts.
Executive income protection
For long-term absence of a key employee.
Personal cover is separate. Our guide to what life insurance is covers policies for you and your family.
Who it is for
Who Needs Business Protection Insurance
Businesses whose profits, ownership or borrowing depend on particular people.
Limited companies with several owners
To keep shares with the remaining owners.
Partnerships and LLPs
To fund a partner’s share.
Businesses led by one expert
Where a founder or specialist drives the income.
Businesses with guaranteed loans
Where owners have given personal guarantees.
Employers offering benefits
Relevant life cover as a staff benefit.
Growing businesses
Taking on investment or borrowing.
Business or personal
Business Protection vs Personal Life Insurance
Both are life and illness cover, but business protection is set up so the money reaches the business or co-owners, not your family.
| Business protection | Personal life insurance | |
|---|---|---|
| Who owns it | The business, owners or a trust | You |
| Who receives the money | The business, co-owners or a staff member’s family | Your family |
| Purpose | Protect profits, shares and loans | Protect your household |
| Who pays | Usually the business | You |
Term cover explained. Our guide to level term life insurance explains how a fixed-term policy works.
Cost
What Business Protection Insurance Is Priced On
The age, health and lifestyle of each person covered, the amount, the term and whether critical illness is included. We do not print average premiums.
Why the person leads
Age, health, smoking and occupation drive the price for each life covered, as with personal life insurance.
Why the cover matters too
The amount, the length of the term and adding critical illness all feed the rate.
What the quote is rated on
The main factors
- The personAge, health, smokingBase
- The amountValue at riskRate
- The termHow long cover lastsRate
- Illness coverCritical illness added or notRate
- OccupationRole and hazardsAdjust
Several lives
Covering several owners adds to the price.
Longer terms
Cover that runs for longer costs more.
Critical illness
Adding illness cover increases the price.
Setting the cover
Setting the Amount and Getting the Set-Up Right
Business protection can fail to do its job when the amount or the set-up does not fit, even when a claim is paid. Four points come up again and again.
Value the key person realistically
Base it on the profit or cost the business would lose, and be ready to explain the figure to the insurer.
Value the shares and review them
A share valuation that is years out of date can leave remaining owners short.
Put an agreement between owners
Shareholder and partnership protection generally works alongside an agreement on buying and selling shares.
Use the right ownership or trust
Who owns the policy decides who receives the money and how quickly. A specialist can explain the options.
Quote checklist
What You Will Be Asked for a Business Protection Quote
Six things shape the quote: the business, the people covered, what you want to protect, the amount, the term, and each person’s health.
The business
Sector, structure and ownership.
The people covered
Roles, ages and dates of birth.
What to protect
Profits, shares, loans or staff benefits.
The amount
How the figure was worked out.
The term
How long cover is needed.
Health and lifestyle
Medical history and smoking.
Comparing
Checking Business Protection Quotes Side by Side
Four areas decide whether a policy fits the business: the cover, illness definitions, the set-up, and cost terms. The price is only one of them.
The cover
- Life only or with critical illness
- The amount and term
- Level or decreasing cover
Illness definitions
- Which conditions are covered
- How they are defined
- Partial payments
The set-up
- Who owns the policy
- Trust options
- Agreements between owners
Cost terms
- Guaranteed or reviewable premiums
- Premium frequency
- Options to increase cover
Check whether premiums are guaranteed. Reviewable premiums can rise later. Unfamiliar terms are explained in our plain English jargon guide.
Cutting costs
How to Reduce the Cost of Business Protection Insurance
The levers are the right amount and term, the right type of cover, and arranging it while the people covered are younger and healthy. We publish no savings figures.
Match the amount to the risk
Neither too high nor too low.
Match the term to the need
Such as the length of a loan.
Decide on critical illness
Include it where it matters most.
Arrange cover early
Age and health affect the price.
Stop smoking
Non-smoker rates apply after a set period with some insurers.
Review regularly
Keep the cover in step with the business.
Glossary
Business Protection Terms Explained
The words that come up most in business protection.
- Key person
- Someone whose loss would hit the business’s profits.
- Shareholder protection
- Cover that funds the purchase of an owner’s shares.
- Relevant life cover
- An employer-arranged life benefit for an employee.
- Critical illness
- Cover paying on diagnosis of listed conditions.
- Sum assured
- The amount the policy pays.
- Term
- How long the policy lasts.
- Trust
- An arrangement that decides who receives the payout.
- Cross-option agreement
- An agreement between owners about buying and selling shares.
- Guaranteed premiums
- Premiums fixed for the length of the policy.
- Non-disclosure
- Not telling the insurer something relevant.
Why MyMoneyComparison.com
Why Compare Business Protection Insurance with MyMoneyComparison.com?
MyMoneyComparison.com is an FCA-authorised UK comparison service that introduces businesses to specialist brokers. We do not sell insurance and we do not give advice: the broker you choose arranges the policy. Using us is free.
One form, one business
Describe the business once, instead of repeating yourself to each broker.
Advice given
We are an introducer, not a broker. We do not sell policies and we do not recommend one insurer or product over another. Read our editorial policy.
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MyMoneyComparison.com Ltd appears on the FCA register under FRN 916241.
Incorporated
A UK company since 2013. FCA authorisation is separate and later; the register carries its date.
FAQs
Business Protection Insurance FAQs
Answers on key person cover, shareholder protection, set-up and cost.
What is business protection insurance?
Life and serious illness cover arranged for a business. It includes key person cover, shareholder and partnership protection, relevant life cover and loan protection, each paying out to protect the business rather than a family.
What is key person insurance?
Cover on someone whose death or serious illness would hit the business’s profits, such as a founder or top salesperson. The payout goes to the business to replace lost profit or fund recruitment.
What is shareholder protection?
Cover that gives the remaining owners the money to buy a deceased or seriously ill owner’s shares. It generally works alongside an agreement between the owners about buying and selling shares.
What is partnership protection?
The same idea as shareholder protection, for partners in a partnership or LLP. It funds the purchase of a partner’s share so the business can carry on.
What is relevant life cover?
A life insurance policy arranged and paid for by an employer for an employee or director, paying out to their family. It is often used where a business has no group death-in-service scheme.
What is business loan protection?
Cover that repays business debts if a person who guaranteed them, or whose work the loan depends on, dies or becomes seriously ill. It can protect owners who have given personal guarantees.
Should we include critical illness cover?
It depends on the risk. Serious illness can remove someone from the business as surely as death, and critical illness cover pays on diagnosis of listed conditions. It adds to the price.
How much key person cover do we need?
It depends on what the business would lose, such as profit, contracts or the cost of recruiting and training a replacement. Insurers ask how the figure was worked out.
How much shareholder protection do we need?
Enough to buy the share at its current value. Shares change in value, so reviewing the valuation regularly keeps the cover in step with the business.
Who owns the policy?
It depends on the type. Key person cover is usually owned by the business, while shareholder protection can be owned by the owners or held in trust. The set-up decides who receives the money.
Is business protection tax deductible?
Tax treatment depends on the type of cover and how it is arranged, and it can change. An accountant can explain how it applies to your business.
What happens if we do not disclose a health condition?
Not answering health questions fully and accurately can lead to a claim being reduced or refused. Answer every question carefully, and ask if you are unsure what to include.
Can a sole trader get business protection?
Some types suit sole traders, such as loan protection or personal income protection. Shareholder and partnership protection are for businesses with more than one owner.
Does business protection cover staff who leave?
Key person cover is tied to a named individual. If they leave, the business may be able to cancel the policy or arrange new cover on a replacement, which the insurer assesses afresh.
Are premiums guaranteed?
Some policies have guaranteed premiums fixed for the term, and others have reviewable premiums that can rise. Guaranteed premiums usually cost more at the start.
How do I compare business protection quotes?
Look beyond the price to the amount and term, whether critical illness is included and how it is defined, who owns the policy, trust options and whether premiums are guaranteed.
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About this page
This page explains UK business protection insurance: what it covers, what it leaves out, and how the amount and the set-up decide whether it works. It is general information rather than advice. Policies differ between insurers, so read your own documents and put the questions raised here to your insurer or broker.
How we approached this page
- Published UK business protection policy summaries
- Insurer guides to key person and shareholder protection
- Financial Ombudsman material on protection complaints
Legal & Regulatory Information:
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