Most popular types of life insurance for your business

When it comes to most things in life, starting is often the hardest part. But leaving it too late to protect your business can mean that if the worst were to happen, it can be detrimental to its financial future.

Business protection is designed to help financially safeguard your business if the worst were to happen. There are various different types of life insurance for your business so to make things easier, we have outlined some of the most common types below for you.


Key person insurance

This is possibly the most well-known type of policy you can choose for your business. If you are a business owner, you will likely have at least one key employee who is crucial to the smooth running of your business.

Whether or not someone is a key person is not always determined by their role, however, more so what they bring to the business. For example, this could be their specialist knowledge, financial input in the company, the contacts they have or even their years of experience in their field.

There are several eventualities that can be caused if you were to lose a key person such as loss of profits, investors and customers losing faith in the business, and time and money having to be spent on finding a replacement. The cash injection that this policy provides in the event of losing a key person could ensure that your business would be able to stay afloat during a testing period.

Relevant life cover

A relevant life policy offers a death-in-service type benefit for whichever employee you choose to cover with this policy. With the sum assured typically being a multiple of their salary and the pay-out will go to whoever they have chosen to be their beneficiaries.

This type of policy pays out a lump sum to your employee’s loved ones if the worst were to happen to them and ensures they will be covered the entirety of the time they are working for your business or until the age of 75, whichever comes first. If an employee stops working for the business then their cover will stop too.

Relevant life cover is not only beneficial for your employees but also beneficial for your business. For your employee’s this policy could provide peace of mind of a tax-free pay-out if the worst were to happen and it is paid for by the employer. As a business, this type of policy benefits you as it is both tax efficient and affordable, it’s also a great benefit to offer your employees even if your business is small.


Shareholder protection

Most businesses typically have one or more shareholders who own a stake in the business. But what happens to a shareholder's shares if they were to pass away? Often these shares are automatically passed on to the shareholders next of kin, meaning that the shareholder’s family has control over a portion of the company's shares. Family gaining control over company shares could potentially result in disruptions to the business - shareholder protection negates this risk.

Think of this type of policy as a succession plan for the ownership of the business as it can remove concerns of what could happen to the shares if a shareholder were to pass away. This type of policy can provide the remaining shareholders with the funds to buy back the shares from the estate of the deceased shareholder.

Group life and critical illness

This type of protection provides a life insurance policy for your employee’s and covers them throughout the duration they work for your business. This death-in-service type benefit is paid for by the employer and will pay-out a lump sum to any employee covered by the policy if the worst were to happen to them. When an employee leaves the company, they can no longer benefit from this policy.

As well as a life option, this policy can also offer critical illness cover too. Meaning that you could financially protect your employee’s if they were to be diagnosed with a critical illness, meeting the providers policy conditions.

Offering employee benefits such as this not only helps with recruitment efforts but can also retain the current staff you have as an attractive employee benefits package is something a lot of people look for in a potential employer.


Business loan protection

At one point or another, a lot of businesses need to take out a loan, whether this be to get your feet off the ground, expand your business or even to move locations. The function of business loan protection is to financially protect your business from having to pay back any outstanding loans if you lose a key person through death or critical illness.

Business loan protection can help to safeguard multiple different types of commercial debt, such as overdrafts, business loans, commercial mortgages and directors’ loans. This policy is recommended if your business has outstanding debts that you would struggle to repay if the owner or a key person was to pass away.


At Caspian Insurance, our business protection specialists are equipped with years of industry knowledge and experience in finding the best protection for your business. Caspian Insurance can search through the UK’s leading providers to find the best policy suited to your company, employee’s and affordability.

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