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Business protection insurance, policy by policy
Business protection insurance is the set of policies that keep a company steady without an owner or a key person, from repaying a loan to keeping ownership with the people running it.
Each one pays someone different: the business, the remaining owners, a lender or a director's family.
Start with who needs the money.
Every claim here is our summary of a named external source, linked beside it. Sources change: check the wording at the link before you rely on it.
Six covers, six jobs
Each card links to the guide for that cover.
The line in orange says who the policy pays.
- Pays the business
Key person insurance
Life cover, with critical illness if chosen, on someone the business depends on. Funds lost profit, recruitment or a loan.
Read the guide → - Pays the business, monthly
Key person income protection
While the key person cannot work: a temporary replacement, profits or loan repayments.
Read the guide → - Pays the continuing owners
Shareholder protection
Funds the purchase of a shareholder’s stake, usually with a cross option agreement.
Read the guide → - Pays the family
Relevant life cover
Life cover the company pays for, written in trust for an employee’s or director’s beneficiaries.
Read the guide → - Pays the business, to pay the person
Executive income protection
Funds a director’s or employee’s ongoing sick pay while they cannot work.
Read the guide → - Pays the business, to clear a debt
Business loan protection
Cover sized to a business loan, so the borrowing can be repaid if a key person passes away.
Read the guide →
Who each pays, summarised from the insurers' own descriptions (check each at its link): key person (Legal & General ↗), key person income protection (Legal & General ↗), shareholder protection (Royal London ↗), relevant life (Royal London ↗), executive income protection (Legal & General ↗), loan cover (Legal & General ↗).
Who gets the money
The policies can all sit on the same director's life, and a company may hold several.
What separates them is who owns the policy and who receives the payout.
Protecting business borrowing
Loan protection keeps borrowing safe.
Legal & General lists the loan to be repaid if the key person passes away as one basis for the amount of key person cover (Legal & General ↗), and Scottish Widows allows full business loan cover for up to 3 directors, owners or key persons (Scottish Widows ↗).
Read your loan agreement too: some include a key man clause that names the people the lender relies on, and what it requires depends on its wording.
Check
Read the loan agreement
See whether a key man clause names the people the lender relies on, and what it asks for.
Size
Match the cover to the loan
The amount to be repaid is one of the published ways to size key person cover.
Share
Cover each person the loan rests on
Scottish Widows allows full loan cover for up to 3 directors, owners or key persons.
Repay
The payout clears the debt
The business owns the policy and receives the money, so it can repay the lender.
A sensible order
Insurance is the last step.
Map what the business depends on first, then match each gap to the cover built for it.
Map
Find who the business depends on
Clients, knowledge, borrowing and ownership that rest on one person.
Size
Put a number on each gap
Earnings, profit and loan methods, with the multiples insurers publish.
Ownership
Agree what happens to the shares
A shareholder agreement and cross option agreement, funded by cover.
People
Look after directors and their families
Relevant life for dependants; executive income protection for sick pay.
Check
Use an authorised firm
The FCA tells consumers to check a firm on its Firm Checker before buying insurance.
Check it for yourself
Every claim on this page is our summary of one of the documents listed here.
We last checked them against the live sources on 28 September 2026.
The documents are the authority, not this page.
Insurers and HMRC update them, so validate any figure or condition at its link before you rely on it.
- HMRC Business Income Manual, BIM45525 ↗Key person cover and the conditions for a deduction
- Legal & General key person insurance ↗Who owns, pays for and receives key person cover
- Legal & General adviser guide ↗Sizing cover, including to a loan
- Royal London shareholder protection ↗Cross option agreements and the own-life structure
- Royal London relevant life FAQs ↗Relevant life: trust, ownership and tax
- Scottish Widows underwriting FAQs ↗Business loan cover for directors and owners
Business protection, answered
Not financial advice. This page is general information. Before buying insurance, the FCA tells consumers to check the firm on its Firm Checker (FCA ↗). For free guidance, see MoneyHelper.