Most business owners insure the van, the stock and the premises, and never insure the people the business actually depends on. Two covers fix that: key person cover and shareholder protection. They solve different problems, and a business with owners and staff usually needs to think about both.
Key person cover keeps the lights on
A key person is anyone whose loss would hurt the business: a founder, a leading salesperson, the one engineer who understands the product. Key person cover pays the business a lump sum if that person dies or, where included, is diagnosed with a serious illness. The money buys time, to recruit, to steady cash flow, to reassure the bank and customers, rather than leaving the business to absorb the shock alone.
Shareholder protection keeps control in the right hands
If a co-owner dies, their share usually passes to their family, who may want to sell, or to be involved, when the surviving owners want neither. Shareholder protection provides the money for the remaining owners to buy that share back, at a fair value agreed in advance, so the family receives cash and the business keeps its ownership intact. It works alongside a cross-option agreement that sets out who can buy and on what terms.
One keeps the business trading. The other keeps it in the hands of the people who run it.
The details that make it work
These plans live or die on the setup: whose life is covered, who owns the policy, who receives the money and how the agreement is written. Get that wrong and the payout can land in the wrong place or trigger an unexpected tax charge. This is where advice, and coordination with the company's accountant and solicitor, earns its keep. We are not tax or legal advisers, so we work alongside yours to get the structure right.
None of this is only for large companies. A two-owner firm with a mortgage and a handful of staff often has more to lose, in proportion, than a big one. The right time to look is while everyone is well.