Business Life InsuranceProtect the Business You’ve Built
Business protection can help your company cope financially if an owner or key person dies, and group life insurance can support your employees’ loved ones. We’ll help you understand the different types of cover and what may suit your business.
- Honest, straightforward advice
- Cover tailored to your needs
- No-obligation review
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What is business life insurance?
Business life insurance is the umbrella name for three types of cover arranged through a business. Key man insurance and shareholder protection help protect the business itself from the financial effects of losing a key person or an owner, such as lost profits or a change in ownership. Group life insurance instead provides a benefit for employees’ loved ones.
A policy pays a lump sum if an insured person dies during the policy term, and some policies can also include cover for specified critical illnesses.
Not a replacement for personal cover
Business policies are arranged for the business or its employees. They don’t replace personal life insurance for your own family.
Group Life Insurance
Group life insurance, often called death-in-service cover, is a benefit an employer arranges for its staff. If an insured employee dies while covered by the scheme, it pays a lump sum to provide financial support for their beneficiaries.
It’s different from key person protection: group life supports employees’ loved ones, while key man insurance supports the business itself.
Good to know
Some policies include wellbeing or bereavement support, depending on the provider and terms. Eligibility, cover limits and any medical requirements vary between schemes. Benefits are often paid through a trust, and tax treatment depends on how the scheme is set up.
Support for loved ones
A lump sum for an insured employee’s beneficiaries following their death.
Flexible scheme design
Benefit levels and employee eligibility tailored to your scheme.
An employee benefit
Can strengthen the package you offer your staff.
Key Man Insurance
Key man insurance, also called key person insurance, covers someone whose skills, knowledge or relationships are vital to the business. If they die, or are diagnosed with a specified critical illness where that cover is included, the policy pays a lump sum to the business.
The business usually owns the policy and pays the premiums, and the payout goes to the business rather than to the person’s family.
Who might be a key person?
Often a director, founder, senior manager or specialist whose absence would directly affect profits, contracts or day-to-day running.
Lost income
Help to cover a fall in profits while the business adjusts.
Finding a replacement
Help with recruitment and training costs.
Stability
Funds to help keep commitments to customers, suppliers and lenders.
Choosing suitable cover
The right arrangement depends on your business’s circumstances.
How much cover
Based on what you’re protecting, such as profits, share values or employees’ benefits.
How long for
For example, until an owner plans to retire.
Who is insured
Owners, directors, key people or eligible employees.
How it’s set up
Who owns the policy, who pays, and whether a trust or agreement is needed.
Important considerations
Points to understand before arranging business protection.
Underwriting and terms
Acceptance, premiums and claims depend on each insured person’s details and the policy terms.
Critical illness cover
Optional cover pays only for specified conditions that meet the policy’s definitions.
Tax and legal advice
Tax treatment, policy ownership and agreements vary, so take appropriate professional advice.
Whether premiums are tax-deductible, or payouts taxable, depends on how a policy is arranged and your business’s circumstances. Your accountant or solicitor can advise on these points.
How Bright Cover helps
Clear, practical support for business owners.
Understanding your business
We learn how your business runs, where it’s most exposed and what you’d like to offer your team.
Explaining your options
Group life, key man insurance and shareholder protection, in plain English.
Helping arrange cover
Comparing suitable options with no obligation, and flagging where you may need professional advice.
Business life insurance FAQs
Answers to questions business owners often ask.
How is this different from personal life insurance?
Business policies are arranged for the business or its employees, while personal life insurance supports your own family. Many business owners need both.
How is group life different from key man insurance?
Group life pays a benefit for an insured employee’s loved ones, while key man insurance pays the business to help it cope with losing someone essential. Read about group life insurance.
Who could count as a key person?
Anyone whose death or serious illness would cause the business a real financial loss, such as a founder, director, top salesperson or specialist. Read about key man insurance.
Do we need an agreement for shareholder protection?
Shareholder protection normally works alongside an agreement between the owners that sets out how shares will be bought. A solicitor can help put this in place. Read about shareholder protection.
How much cover does a business need?
There’s no single formula. It depends on what you’re protecting, such as profits, the value of shares or the benefits you’d like to provide for employees. We can help you work through it.
Can critical illness cover be included?
Many policies offer it as an option. It only pays for specified conditions that meet the policy’s definitions, and it increases the cost of cover.
Are the premiums tax-deductible?
It depends on the type of policy, how it’s arranged and your business’s circumstances. Your accountant can advise on the tax treatment of premiums and any payout.
Ready to talk through your options?
Request your free, no-obligation review and an adviser will be in touch.