The most common problem is when one of the existing partners or shareholders dies. If this happens, a Partnership may have to be dissolved. And a Shareholder’s share may go to one of their relatives.

That’s why it’s a good idea to put a Business Protection Insurance policy in place that allows the surviving partners or shareholders to ‘buy out’ the interest of the deceased.

There are different ways of doing this. The best option will depend upon your company’s circumstances and those of its potential beneficiaries.

This can be especially important for smaller companies, as their profits often depend on these key people.

These are the main types of business insurance available.

Key Person: This is where a cash lump sum is put into the business if a ‘key person’ dies. The usual solution is a Term Assurance policy.

Partnership/Director Share Purchase: Here, the families of directors and co-owners of the business will be protected if one of the partners or directors dies. This uses a combination of Term assurance policies and legal documents. And, it means that the remaining co-owners will have money in place to let them ‘buy out’ the family of the deceased for a fair sum.