Why your company needs its own protection
If you run a limited company (whether it’s a property SPV, a trading business or both), there’s a gap most personal insurance never touches. Your own life cover looks after your family. But who looks after the company: the mortgages in its name, the shareholding, the co-director left running things alone? That’s what business protection is for, and in my experience it’s the conversation limited company landlords have last when it should come first.
If you’re still weighing up the company route itself, my Limited Company Buy to Let page covers the mortgage side. The two subjects fit together more closely than most people realise.
Relevant Life policies: life cover your company pays for
A Relevant Life policy is personal life cover with a corporate twist: your limited company owns and pays for a policy on the life of a director or employee, with the payout going to that person’s family through a discretionary trust. For many directors it’s a smarter way to buy the life insurance they were going to buy anyway.
The appeal is in the tax treatment. Premiums are usually an allowable business expense for the company, and there’s normally no benefit-in-kind charge on you personally, so cover is bought with company money rather than income you’ve already paid tax on. As ever, tax treatment depends on your circumstances and can change, so please confirm the position with your accountant or tax adviser; I’ll handle the cover, they should sign off the tax.
Key Person cover: protecting the engine of the business
Ask yourself honestly: if one person in your business died or was diagnosed with a serious illness tomorrow, would profits take a hit? If the answer is yes, that’s a key person, and it’s very often you. Key Person cover pays a lump sum to the company if that person dies or, with critical illness cover added, suffers a specified serious illness. The money buys breathing room: hiring cover, reassuring the bank, steadying cashflow while the business regroups.
For a property company the key person is usually the director who sources the deals, manages the refurbs and holds the lender relationships. The rent may keep arriving, but the growth (and often the refinancing) stops without them.
The personal guarantee question. If you own an SPV, you’ve almost certainly signed personal guarantees on its mortgages. Think about what happens to that company debt if you die: the guarantees can follow you into your estate, and your family could inherit a leveraged property company they never planned to run. Life cover sized against the company borrowing (held personally or through the business) is one of the cleanest ways to defuse that risk. It’s a conversation worth having before the next purchase, not after.
Shareholder Protection: keeping control where it belongs
When a shareholder dies, their shares usually pass to their estate, which means the surviving directors could suddenly be in business with a grieving spouse who wants the value out, not the workload. Shareholder Protection solves this with two pieces working together: life policies on each shareholder, and a cross-option agreement giving the survivors the right to buy the deceased’s shares and the estate the right to sell them, at a fair value, funded by the policy payout.
The result is clean for everyone. The family gets money instead of shares they didn’t want; the surviving shareholders keep control of the company they’re running. Partnerships can be protected in much the same way. The legal agreement matters as much as the insurance, so your solicitor and accountant should be involved in setting it up properly.
The small print, plainly
All of these are pure protection policies: they have no cash-in value at any time, and if premiums stop, cover stops. Everything is subject to underwriting and the insurer’s terms and conditions, and premiums depend on age, health, lifestyle and the amount and length of cover. None of this is exotic (it’s the same honest trade every insurance policy makes), but I’d rather you hear it from me at the start than find it in a document later.
How I help
I’ll map out where your company is exposed (debt, key people, shareholdings) and compare policies across leading insurers to cover the gaps in the right order, at the right sums. I’m paid commission by the insurer if a policy goes ahead, which I’ll always disclose. For the tax and legal mechanics, I’ll work alongside your accountant and solicitor rather than around them.