Why this cover matters
Key person and business protection insurance is essential for safeguarding a company’s future when the unexpected happens. On average, it costs an SME £1.4 million to recover from the loss of a key employee due to death or critical illness; factoring in lost revenue, recruitment, and training costs (fortunefinancial.co.uk).
If a co-owner passes away, surviving shareholders may not have the funds to buy out their shares, potentially leaving the business in limbo (Legal & General). Additionally, banks can demand immediate repayment of business loans if the personal guarantor dies, forcing the company into costly, rushed refinancing or even a fire sale.
To make matters more complex, HMRC may tax a key person pay-out unless the policy was structured according to the Anderson Principles. Setting the policy up correctly from the start ensures your business avoids unexpected tax liabilities (My Key Finance Ltd / GOV.UK).
Getting this cover right means your business has the stability and financial tools to recover quickly and continue trading, even in the face of a major loss.
