Learn the answer to ‘can you take out life insurance on a business partner?’, the benefits of doing so and some of the policies for business life insurance.
As a business owner, you need to be ready for any scenario. While it might not be pleasant to think about, this includes the death of a business partner. In this article, we ask ‘can you take out life insurance on a business partner?’ and list some benefits of getting a business life insurance policy for you and the company.
Can you take out life insurance on a business partner?
The UK has over 2.7 million businesses which work hard every day to generate profits and positively impact the economy. However, most of these business owners don’t know what would happen if one of their business partners passes away. That’s what a business life insurance policy is for. A business life insurance policy protects a business’s finances in the event of unforeseen circumstances, such as a critical illness or the death of a key business partner. Business life insurance is a broad term that encompasses a range of different policies, including:
Key person insurance
Key person insurance policies protect against the death of a specific person in a company. These people are typically the owners and shareholders of a company who play an important role in the organisation. In these instances, the policy pays out to the company, providing funds for replacing the individual in question and keeping the business functioning during difficult times.
Relevant life insurance
Relevant life insurance covers single members of staff in companies that are too small to consider setting up group protection schemes. It’s designed to pay a lump sum to the employee’s family if they die or are diagnosed with a terminal illness during the term of the policy.
Shareholder protection covers members of staff with a significant shareholding in the business. This policy activates when a shareholder passes away, providing funds for the other shareholders to buy out the deceased individual’s shares of the company, ensuring that the company’s ownership remains in their hands.
The benefits of business life insurance
Some of the benefits of taking out a life insurance policy for a business partner include:
Retaining business structure
Depending on the nature of the deceased’s will, their passing could have a direct impact on their shares in a company. Some give their shares to fellow shareholders, while others keep them in the family, passing them on to partners or children. This risks the structure and management of the company going forward. Share protection means that fellow shareholders have an advantage, allowing them to purchase the deceased’s shares in the business, so existing management and leadership structures stay in place. The business can keep moving with as little disruption to operations as possible.
Attracting more employees
In a competitive labour market, hiring new members of staff is an important part of making the most of your company’s potential. But with competition for experience workers increasing, offering a generous benefits package could prove essential. Providing a relevant life policy for key roles in your organisation means that people have more assurances when they apply for your business, making your company more attractive than your competitors and helping to build a competitive advantage.
When a key member of staff passes away, you lose more than just a friend or colleague. There’s nobody there to complete their tasks, and you lose all their innovative ideas too. Business life insurance policies provide companies with a significant pay-out. This is usually enough to tide a company over until they find someone new, funding the recruitment process and helping the company to replace an essential member of staff quickly. A death in your company is a tragic event, but it doesn’t have to affect your company in the long term when you have a life policy in place.
Try WIS Business Protection
If you’re interested in a life insurance policy that protects your business as well as the families of your business partners, contact WIS Business Protection today. We offer a range of insurance policies, and our experts will look to get you the best possible policy for your company. If you have more questions like ‘can you take out life insurance on a business partner?’, we’re more than happy to answer them.