Question 1

What is business protection insurance?

Accepted Answer

Business protection insurance is a range of policies designed to safeguard your company against the financial impact of losing a key individual through death, critical illness, or long-term incapacity. It includes products such as Key Person Insurance, Shareholder Protection, Business Loan Protection, and Relevant Life Insurance. These policies help ensure your business can continue operating, repay debts, and retain ownership during difficult times.

Question 2

What is Relevant Life Insurance and how does it work?

Accepted Answer

Relevant Life Insurance is a tax-efficient life insurance policy taken out by an employer on behalf of an individual employee. Premiums are paid by the company and are typically allowable as a business expense for corporation tax purposes. The benefit is paid into a discretionary trust, meaning it falls outside the employee's estate for inheritance tax. It is particularly popular with company directors and higher-rate taxpayers as an alternative to group life schemes.

Question 3

What is Key Person Insurance?

Accepted Answer

Key Person Insurance protects your business against the financial loss that would result from the death or critical illness of a person crucial to the company's success. This could be a founder, director, top salesperson, or anyone whose absence would significantly impact revenue or operations. The policy pays a lump sum to the business, which can be used to cover lost profits, recruit a replacement, or stabilise the company during a difficult period.

Question 4

Why do business owners need Shareholder Protection?

Accepted Answer

Shareholder Protection ensures that if a business owner or shareholder dies or becomes critically ill, the remaining shareholders can buy back the deceased's shares rather than them passing to family members or third parties. It works alongside a cross-option agreement and prevents unwanted outside involvement in your business. Without it, surviving shareholders may not have the funds to purchase the shares, which can lead to disputes and disruption.

Question 5

Is business protection insurance a tax-deductible expense?

Accepted Answer

The tax treatment depends on the type of policy and its purpose. Relevant Life Insurance premiums are generally allowable as a business expense for corporation tax. Key Person Insurance premiums may be tax-deductible if the policy is taken out to protect against loss of profits, though HMRC assesses each case individually. Shareholder Protection and Business Loan Protection premiums are not usually tax-deductible. We always recommend seeking professional tax advice tailored to your specific circumstances.

Question 6

How much does business protection insurance cost?

Accepted Answer

The cost of business protection insurance varies depending on factors such as the type of cover, the sum assured, the age and health of the person being insured, whether the policy includes critical illness cover, and the policy term. As an independent broker, IGotCover compares quotes from leading UK insurers to find you the most competitive premium for the level of cover you need. You can request a free, no-obligation quote by contacting our team.

Question 7

What is Business Loan Protection?

Accepted Answer

Business Loan Protection is a life insurance policy designed to cover outstanding business debts — such as commercial mortgages, director's loans, or bank lending — in the event that a key individual dies or is diagnosed with a critical illness. It ensures the business can repay the debt without placing financial strain on the remaining directors, partners, or the company itself. Many lenders also require this type of cover as a condition of lending.

Question 8

Why should I use an insurance broker like IGotCover?

Accepted Answer

Using an independent broker like IGotCover means you get access to policies from a wide panel of leading UK insurers, ensuring you receive impartial advice and competitive pricing. Our specialists understand the nuances of business protection, including trust arrangements, tax implications, and FCA requirements. We handle the entire process from quote comparison through to application and claims support, saving you time and ensuring your cover is set up correctly.

Question 9

How do I know how much business protection cover I need?

Accepted Answer

The amount of cover depends on what you are protecting. For Key Person Insurance, it is typically calculated based on a multiple of the person's gross profit contribution or the cost of finding and training a replacement. For Shareholder Protection, it should reflect the market value of the shares. For Business Loan Protection, it should match the outstanding debt. Our advisers carry out a thorough assessment of your business needs and recommend the appropriate level of cover.

Question 10

Is IGotCover regulated by the FCA?

Accepted Answer

Yes. IGotCover is a trading name of Caspian Assured Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA). This means we are required to meet strict standards around advice quality, fair treatment of customers, and handling of client information. You can verify our registration on the FCA Register.

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