Business Protection Insurance UK: Complete Guide

Company directors have two parallel worlds of life insurance to consider: personal cover held in their own name, and business-paid cover structured through the limited company. Both solve overlapping problems (paying off a mortgage, supporting dependants) but the tax treatment and trust arrangements are very different.

Personal life insurance is simple: premiums from taxed income, policy written into discretionary trust, benefit paid to named beneficiaries free of inheritance tax if the trust is set up correctly. A relevant life policy does the same job but the company pays the premium — which means no personal income tax, no National Insurance, and corporation tax relief on the premium as a deductible business expense. For a higher-rate-taxpayer director, the net cost is often 40% lower.

Where both are relevant, we typically recommend relevant life for core family cover (because of the tax saving) and a small personal top-up to allow for flexibility if the director leaves the company in future. Shareholder protection and key person cover sit alongside as distinct commercial protections, not substitutes for personal family cover.