A variety of insurance solutions are available to protect a business, its Directors, and key personnel. Such policies however need to be structured effectively with the appropriate legal agreements.

One example is life insurance policies. These often need to be written into trusts if an individual or family member is the beneficiary, mitigating potential inheritance tax charges or delays caused by the probate and administration process. If they are being used in a business context, the policy may also need to be accompanied by a shareholder agreement or an alteration to the articles of association.

Key person insurance can also be an important requirement to business protection. Unfortunately, the level of cover often does not actually meet the true cost of replacing an individual’s expertise and profit-making ability. Neither does it cover the actual cost of hiring a temporary replacement or consultant, which can be significantly higher than a monthly salary payment. Consideration needs to be given to practical contingency planning alongside the insurance cover.