Most key man insurance policies we arrange for people are for limited companies. But not all companies are Ltd and therefore we need to know how to cover a key person if the company is a partnership. With a Ltd company the business will actually be the owner of the policy. This means in the event of a claim the business will receive the monies. A ltd company is its own entity and therefore can own things. Unlike a partnership which cannot.
Basically with partnership protection each partner will own the others policy. When there is more than two partners the beneficiaries are normally sorted out through a trust. If this is for shareholder protection then of course a cross option agreement must also be in place.
Limited Liability Partnerships can be handled much the same way as a limited company as it can own the policy.
Actually a partnership is often more in need of key man insurance than a ltd company. Partnerships tend to be smaller and are often just two people. Therefore if one person dies 50% of the workforce has gone. This person could even be responsible for 100% of the profit. So small companies are sometimes more likely to be hit harder when a person dies or becomes critically ill.
Partnership protection can be taken out as a stand-alone life policy or with critical illness attached. As like any other business protection policy it can be taken over any term as a level term policy or as a decreasing. Speak to one of our advisors for more information on partnership protection.
We use a range of insurance providers and their products could be more suitable for your company. These articles are for information only and does not constitute as financial advice in any way