Business Protection

Business protection solutions that safeguard your company if a key individual becomes unable to work — helping you protect cash flow, maintain stability, and plan for the unexpected.

Could your business survive losing a key person?

Many businesses depend on key individuals for their ongoing success. The sudden death or serious illness of a director, founder, or high-value employee can have an immediate and severe impact on revenue, client relationships, lender confidence, and the ability to keep operating. Yet research by Legal & General found that over half of UK SMEs would cease trading within 12 months of losing a key person.

Business protection solutions can help safeguard your company if a key person becomes unable to work — providing funds to cover lost profits, recruit a replacement, repay business debts, or facilitate a smooth change in ownership. Reviewing your arrangements regularly helps ensure they remain aligned with your business structure, ownership, and borrowing.

Becketts works with business owners, directors, and partnerships to put appropriate protection in place — as part of a broader financial planning relationship that also covers your personal wealth, pensions, and estate planning.

The Risk Most Businesses Don’t Plan For

Consider what would happen if a key person in your business were suddenly unable to work. Could you:

Continue to service existing clients and win new ones without them?
Meet loan repayments, leases, and other fixed costs if revenue fell?
Fund the recruitment and training of a replacement at short notice?
Buy out a deceased shareholder’s interest without a damaging dispute with their estate?
Maintain the confidence of your bank, suppliers, and customers?

For many businesses — particularly owner-managed firms with a small number of directors or key staff — the honest answer is no, or not easily. Business protection is designed to address that vulnerability before it becomes a crisis.

The Main Types of Business Protection

Key Person Insurance

The business takes out a life (and optionally critical illness) policy on a person whose loss would have a significant financial impact. The business pays the premiums and receives the payout. The sum assured is typically calculated based on lost profits, the cost of finding and training a replacement, or a multiple of the key person’s salary or contribution to turnover.

To illustrate the scale of the risk: in a company with four key people whose average age is 40, there is a 15% probability that at least one will die before age 65, and a 39% probability that at least one will suffer a critical illness (Zurich).

Shareholder and Partnership Protection

If a business owner dies or is diagnosed with a critical illness, their shareholding or partnership interest will typically pass to their estate. Without a plan in place, surviving owners may find themselves with a new and unwanted business partner, or unable to acquire the interest without significant disruption. Shareholder protection insurance provides the funds for surviving shareholders to purchase the deceased’s interest, usually structured with a cross-option agreement to preserve business property tax reliefs.

Despite the risk, over 50% of UK business owners have left no instructions in their will relating to their company shares, and nearly half have made no specific arrangements for their shares in the event of death (Legal & General).

Relevant Life Cover

An employer-funded individual death-in-service policy, particularly suited to smaller businesses or high-earning directors for whom a group scheme may not be cost-effective. Premiums are a deductible business expense and are not a benefit-in-kind for the employee. Payouts are tax-free and sit outside the employee’s estate for Inheritance Tax purposes. Importantly, payouts do not count against pension tax limits which makes Relevant Life Cover an effective tool for business owners whose pension allowances are already fully used.

Business Loan Protection

Covers the repayment of business debts, like commercial mortgages, director’s loans, or bank lending, if a key person dies or is diagnosed with a specified critical illness. The sum assured tracks the outstanding loan. Two-thirds of UK SMEs carry some form of business debt, with average borrowing of £176,000, yet only 2 in 10 use an insurance policy as security.

How Becketts Helps Business Owners

1. Business protection review

We review your business structure, ownership arrangements, key personnel, and any existing cover. We identify gaps and assess the financial impact if a key person were lost.

2. Personalised recommendation

We advise on the most appropriate combination of products — cover type, sum assured, policy structure, and ownership — taking into account your tax position, ownership agreements, and lender requirements.

3. Implementation

We source cover from the whole market, manage the application and underwriting process, and help you put appropriate legal structures in place — working alongside your solicitor and accountant.

4. Ongoing review

Your business changes. As it grows, takes on debt, changes ownership, or promotes key people, your protection needs to keep pace. We review your arrangements regularly.

Why Employers Choose Becketts

• Chartered Financial Planning Firm

Accredited by the Chartered Insurance Institute every year since 2011.

Certified B Corporation

Recognised for high standards of social and environmental performance, transparency and accountability.

Recognised Top Financial firm

Becketts is consistently recognised as being one of the top 100 financial firms in the UK by FT Adviser (a Financial Times publication) and New Model Adviser from Citywire

Established and trustworthy

38 years of helping clients and over £1.7 billion in assets under management

High Client Satisfaction

Score of 96 out of 10 private client satisfaction in a recent client survey

Business Protection FAQs

What is Key Person Insurance and who does it cover?

Key Person Insurance is a policy taken out by the business on an individual whose loss would have a significant financial impact, typically a founder, managing director, lead salesperson, or specialist whose skills or client relationships are central to revenue. The business pays the premiums and receives the payout if the person dies or (where critical illness cover is included) is diagnosed with a specified serious illness.

Is Key Person Insurance tax-deductible?

It depends. Where the policy covers loss of trading income and the insured is an employee (not a major shareholder), HMRC may allow the premiums as a deductible business expense – in which case any payout is a taxable trading receipt. Where the purpose is capital protection or the insured is a shareholder-director, premiums are typically not deductible and payouts are generally treated as non-taxable capital receipts. The tax treatment depends on your specific circumstances and HMRC’s assessment. We always recommend taking accountancy advice alongside our financial planning advice

What is Relevant Life Cover and how does it differ from Group Life?

Relevant Life Cover is an individual employer-funded death-in-service policy, typically used for businesses too small to set up a group scheme, or for directors who want higher cover limits without using their pension allowances. Unlike a registered group life scheme, Relevant Life payouts do not count against pension tax limits. Premiums are tax-deductible for the business and are not a benefit-in-kind for the employee.

How much cover does my business need?

This depends on the role, revenue impact, replacement cost, and existing business debts. For Key Person cover, we typically calculate the sum assured based on the profit attributable to the key person or the cost of replacement. For Shareholder Protection, the sum assured should broadly match the market value of each shareholder’s interest, reviewed regularly. We provide a full needs analysis as part of the review process.

Do I need a solicitor as well as a financial adviser?

For Shareholder Protection in particular, yes. A cross-option agreement is a legal document that should be drafted by a solicitor alongside the insurance policy. Becketts works alongside your legal and accounting advisers to ensure the full arrangement is correctly structured. We do not draft legal documents but co-ordinate with your professional team.

Arrange a business protection review

Tell us a little about your business and what you are looking to protect, and we will be in touch to arrange a conversation. First meeting at our expense, no obligation.