Protection for the people and commitments behind your business
A business can depend on a small number of people, a carefully balanced ownership structure and borrowing arranged around future plans. The death or serious illness of an owner or key employee may therefore create both an operational and a financial problem.
TLA Finance can help you identify the financial exposure, understand the main types of business protection and arrange suitable cover, subject to eligibility and insurer underwriting.
From Amersham, TLA Finance supports clients in Buckinghamshire, London, the Home Counties and across the UK.
Cover is subject to eligibility, underwriting, policy definitions and exclusions. Claims must meet the policy terms. If premiums are not maintained, cover may end. Most protection policies have no cash-in value.
What is business protection insurance?
Business protection is a group of insurance arrangements designed to provide funds after a specified event involving an owner, partner, member, director or key employee. Depending on the need and arrangement, a valid claim may help the business manage lost profit, recruitment costs or borrowing, or give the remaining owners funds to purchase a departing owner’s interest. The policy owner, person insured, beneficiary, amount of cover and accompanying trust or legal agreement must fit the purpose.
These are not interchangeable details: the wrong ownership or documentation may mean funds do not reach the intended person or business in the intended way. Important limitation: Business protection is not a guarantee of business survival, loan repayment, a share sale or payment of a claim. Policies pay only when the insured event and all relevant policy conditions are met. Definitions, exclusions, underwriting, evidence requirements and policy terms apply.
Which business risks can be reviewed?
The correct structure depends on the legal form of the business, the intended recipient of the proceeds and the advice provided. Critical illness cover is optional on some arrangements and conditions covered vary by insurer.
Key person protection
Designed to address financial loss after the death or specified serious illness of someone whose skills, relationships or contribution are important to the business.
The proceeds usually go to the business or an appropriately arranged trust, depending on structure and purpose.
Shareholder protection
Funding that may allow surviving shareholders to purchase a deceased or critically ill owner’s shares under an appropriate agreement.
The proceeds normally go to the surviving owners or trustees under the agreed arrangement.
Partnership or LLP protection
Funding that may help remaining partners or members purchase an affected owner’s interest and continue the business.
The proceeds normally go to the remaining partners, members or trustees under the agreed arrangement.
Business loan protection
Funds to help repay or reduce qualifying business borrowing following a covered event involving a relevant person.
The proceeds may go to the business, lender or trustees, depending on the documented arrangement.
Key person protection
A key person is someone whose absence could materially affect revenue, profit, customer relationships, technical capability, leadership or the delivery of important contracts. That person could be an owner, director or employee; job title alone does not decide the need. A valid payout may give the business financial breathing space while it recruits or trains a replacement, manages disruption or adjusts its plans. The amount of cover should be linked to a defensible business loss or cost rather than selected in isolation.
Shareholder and partnership protection
If a shareholder, partner or LLP member dies or suffers a covered critical illness, the remaining owners may want the option to buy their interest. The affected owner or estate may also need a willing buyer and an agreed route to receive fair value. Protection can provide funding, but insurance alone does not create a sale or determine the rights of the parties. The policy ownership, trust, business valuation, articles or partnership agreement and any cross-option or buy-and-sell agreement need to work together.
A solicitor and accountant should advise on the legal and tax position.
Business loan protection
Borrowing may rely on the contribution or guarantee of an owner or other key person. Business loan protection may provide funds to help repay or reduce an overdraft, commercial mortgage or other qualifying business debt after a covered event, if the arrangement and claim meet the policy terms. The cover should be reviewed against the current balance, term, repayment structure, guarantees and lender requirements. Any insurance requirements from your lender should be confirmed in writing for your case before you arrange cover.
What about Relevant Life cover?
A Relevant Life policy is generally an employer-funded death-in-service arrangement for an individual employee. Its purpose is normally to provide a benefit for the employee’s beneficiaries, not a payout to protect the business from financial loss. It may be considered alongside business protection, but it addresses a different need and has specific qualifying, trust and tax requirements. TLA Finance will explain when separate legal or tax advice is needed.
How we review your business protection
Information we may need
The insurer may request health, lifestyle, occupational and financial information. For larger or more complex cases, financial underwriting can include:
Any initial indication remains subject to a full application and underwriting. An insurer may offer standard terms, charge a higher premium, apply an exclusion, postpone a decision or decline cover.
Tax, trusts and legal agreements
The tax treatment of premiums and proceeds is not the same for every type of business protection. It can depend on the purpose of the policy, the relationship between the parties, how the arrangement is documented and the law and HMRC practice at the relevant time. Tax treatment can change and is not guaranteed. TLA Finance can arrange and advise on protection insurance within its permissions.
We do not provide legal or accountancy advice. Trusts, cross-option agreements, company purchase of own shares, partnership documents, valuations and tax treatment should be confirmed by appropriately qualified legal and tax advisers.
Why advice and regular reviews matter
A policy needs to solve the right problem and place the proceeds in the right hands. Business protection should therefore be reviewed as the business changes.
TLA Finance does not guarantee acceptance, a particular premium, tax treatment or payment of a claim.
Ready to review your business risks?
A focused review can identify which people, ownership interests and liabilities create the greatest financial exposure, what resources already exist and whether insurance should form part of the continuity plan.
Important information
Business protection policies pay only when the insured event and all applicable claim conditions are met. Definitions, exclusions, policy limits, underwriting and evidence requirements apply. Critical illness cover is not included in every arrangement and covered conditions vary. Premiums must be maintained for cover to continue. Most protection policies have no cash-in value. Do not cancel existing protection until any replacement policy is fully in force and the differences in ownership, cover, exclusions, cost and terms have been understood.
The correct policy ownership, trust and legal documentation depend on the business structure and purpose. Seek appropriate legal and tax advice. Tax treatment depends on individual circumstances and may change.
Frequently Asked Questions
What is business protection insurance?
It is a group of insurance arrangements intended to provide funds after a covered event involving an owner, partner, member, director or key employee. The purpose may be to manage business disruption, protect borrowing or fund the purchase of an ownership interest.
Who can be treated as a key person?
A key person may be an owner, director or employee whose absence could materially affect revenue, profit, important relationships, specialist capability or business continuity. The business must be able to explain the financial exposure.
What is the difference between key person and shareholder protection?
Key person protection is generally intended to address financial loss suffered by the business. Shareholder protection is generally intended to provide funds to help remaining owners purchase an affected owner’s shares under an appropriate arrangement.
Can business protection cover critical illness?
Critical illness cover may be available with some arrangements, normally at additional cost and subject to eligibility and underwriting. A claim is payable only if the diagnosis meets a covered policy definition and all relevant terms are satisfied.
Can business protection help repay a commercial mortgage or business loan?
Business loan protection may provide funds to help repay or reduce qualifying borrowing after a covered event. The need, amount, policy ownership and any lender requirements must be checked for the particular case.
Are business protection premiums tax deductible?
Not automatically. The treatment depends on the purpose and structure of the arrangement and the relevant law and HMRC practice. Obtain case-specific advice from a qualified accountant or tax adviser.
Do we need a trust or shareholder agreement?
Some arrangements use trusts and legal agreements so that proceeds and ownership options work as intended. The correct structure depends on the business and should be confirmed by an appropriately qualified solicitor and tax adviser.
How much business protection is needed?
The amount should be linked to the financial exposure, such as a defensible loss of profit, replacement cost, ownership value or outstanding borrowing. Insurers may request financial evidence and apply their own limits.
When should business protection be reviewed?
Review it after material changes to ownership, key people, profit, valuation, borrowing, guarantees or legal agreements, and before an existing policy ends.
Speak to TLA Finance
Discuss the people, ownership arrangements and borrowing your business needs to protect.
Request a business protection review
Provide your basic contact details and select your preferred time and method of contact. We will explain how any further information should be supplied securely.
Please do not include medical, health, genetic, bank-account or confidential business information in this general enquiry form.
