When you're building a business, the focus is often on growth, profit, and opportunity. But what happens if one of your key people — or shareholders — suddenly dies or becomes critically ill?
Shareholder & Key Person Protection turns that question from a risk into a plan.
It’s a strategic layer of insurance that ensures your business can survive a worst-case scenario — with the money, structure, and legal clarity to keep going without disruption.
At its core, this type of protection is a business continuity and succession solution backed by insurance. It provides a tax-free lump sum to the company or shareholders in the event a key individual passes away or is diagnosed with a serious illness.
There are two main parts:
Protects the business financially when someone critical to operations — such as a founder, director, or senior employee — can no longer work due to death or serious illness.
The payout can be used to:
Allows remaining shareholders to buy back shares from the estate of a deceased or critically ill business partner. This ensures:
Without this protection in place, your business could face:
It’s not just about protecting the business today — it’s about safeguarding everything you’re building for the future.
Putting Shareholder & Key Person Protection in place involves more than simply taking out an insurance policy — it requires careful planning, accurate valuations, and tailored legal structuring. Here's a simplified process that typically unfolds:
Start by determining who is essential to the continuity and value of the business — this could include founders, directors, senior employees, or shareholders.
Calculate how much cover is required. This may involve valuing the business, estimating recruitment costs, lost profits, or the value of a shareholding. Getting this right can be complex and often requires professional guidance.
For Key Person Protection, the policy is usually owned by the business.
For Shareholder Protection, there are typically two main options:
The right approach depends on your company’s structure, tax considerations, and future plans — it’s always bespoke.
For shareholder protection, agreements such as cross-option agreements are essential to provide legal clarity and avoid disputes. Where relevant, policies should be written into a specialist business trust to ensure funds are passed on efficiently and used as intended.
The policy pays out a tax-free lump sum to either the business (in the case of Key Person Protection) or to the surviving shareholders/trust. These funds are then used to:
✅ It protects your business value.
✅ It keeps your succession plans on track.
✅ It shows investors and lenders you're prepared.
✅ It supports your long-term financial and retirement goals.
Put simply: Shareholder & Key Person Protection is what turns an unpredictable future into a controlled transition.
If your business relies on a few key people to survive, then Shareholder & Key Person Protection isn’t just optional — it’s essential.
Let’s help you put a proper plan in place.
Get in touch to speak to a specialist.
One of our qualified and regulated advisers would be very happy to discuss your requirements.
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