Business protection: key insurance policies every UK company should consider
Business protection refers to a suite of insurance-based solutions designed to support a business in the event of death, serious illness, or incapacity affecting its key people.
These policies ensure continuity, financial stability, and peace of mind for both the business and the individuals behind it
Key types of business protection
Relevant Life Policy (RLP)
This provides life cover for an employee or director, typically written in trust for their family. It is often more tax-efficient than a personal life insurance policy, as premiums are usually paid by the business and can be considered an allowable business expense. Crucially, it is not usually classed as a benefit in kind, meaning no P11D reporting is required.
Executive income protection
Designed to cover salary and dividend loss due to long-term illness or injury, this policy helps maintain a director’s income during difficult periods. Like RLPs, premiums are generally paid by the business and may be deductible for corporation tax purposes.
Key person protection
Every business has individuals it relies on, whether they generate revenue, hold strategic knowledge or build client relationships. If a key person dies or becomes critically ill, the business could face serious financial disruption. Key person protection pays out a lump sum to help cover the cost of lost income, recruitment, or temporary staffing.
Shareholder protection
If a business owner dies or becomes critically ill, shareholder protection provides a payout to the remaining shareholders, enabling them to buy out the affected party’s shares. This keeps control of the business within the hands of the existing owners and prevents external influence.
Why having the right business protection matters
Without adequate protection, even a thriving business can face significant hardship. Business protection policies help maintain cash flow, reassure stakeholders, and ensure the company can continue to operate. They also offer vital personal protection to directors and their families, supporting household income and providing long-term security.
Get expert advice
Remember, all decisions should be considered in the context of your own personal circumstances.
If you wish to discuss your financial position and the business protection options available to you, please contact one of our advisers.
You can reach us at info@thepennygroup.co.uk or on 0207 061 2345.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
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Approved by The Openwork Partnership on 23/07/2025.
