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Thinking the unthinkable

Why do people shy away from talking about business owners’ and life insurances?

We think nothing of buying car, home and health insurance to repair our cars, homes and bodies but what policies are available to keep the wheels of our lives and businesses on track if we are incapacitated or die?

Comfortingly, there are a variety of options to choose from; we call them ‘business protection’ policies but as you’ll read below, the end result will be protecting your loved ones just as much as they are covering your business.

Business related policies

  • Key person insurance protects the profits of your business if you, or someone your business relies on, were diagnosed with a serious illness or died. It can pay for things like recruitment of your replacement, repaying loans if the bank decides to call them in, and even replace lost turnover if clients leave.
  • Director share purchase provides funds for the other directors of the company to buy back your shares if you were to pass away. Your beneficiaries would receive a lump sum, equal to your share value and your business partners can carry on running the company. It’s important to review your shareholders’ agreement and make sure it matches your objectives, to give you real peace of mind.

Personal protection policies

  • Life insurance provides a lump sum on your death. You have the option of paying the premium personally or putting it on company expenses (which means corporation tax relief). This can pay off any remaining mortgage or outstanding debts and includes a lump sum that can be invested to provide an income or gifted to children.
  • Critical illness cover ensures you receive a lump sum payable on diagnosis of a serious illness. You may choose to take time off, paid for by your policy, to allow you to have surgery and recuperate, without having to worry about going back to work until you are completely recovered.
  • Income protection is the last line of defence, if your condition were to result in you being unable to return to work, yet you’re nowhere near pensionable age. At this point, your income protection policy steps up, paying you a regular monthly amount until you are of pensionable age.

Case Study

Alex suffered a stroke in his 40s. As a director in a family business, his absence could have had serious consequences. Luckily, he’d received some timely advice and had taken out two policies which made all the difference.


Firstly, Alex was advised to take out key person insurance, which helped the business to cover the cost of recruiting his replacement while he was unable to work. Secondly, he had taken out income protection insurance which would provide an income until his 60th birthday. The result was that his business could continue with little disruption until Alex was able to return to work and continue supporting his family.

The advice around key person cover and income protection was spot on. The key person plan kept my business operating while I was recuperating. Without it, the business, my staff and their families would have suffered. The income protection meant I have been able to continue to support my family. It was one of the best pieces of advice I received and the best decision I made

If you’d like to talk through some of these big issues, contact us to explore which option best suits your situation and budget.