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Partnership Protection Insurance

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.

So How Do We Set Up Partnership Protection?

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