Cover that keeps the business running.

Usually when the company first depends on a single person to keep trading, when shares are split between owners, or when the team grows past the point where one absence is invisible. In practice that is often by the time turnover passes a few hundred thousand pounds, or once a second director joins. Earlier is cheaper because underwriting is easier at a younger age.

Two common methods. The profit method takes recent net profit and multiplies by the years it would take to replace the person, often two to five. The salary method takes the key person's remuneration and multiplies by a similar factor. We agree the figure with you and your accountant so the sum insured can be evidenced if the policy ever has to pay out.

There are two parts. First, a cross-option agreement (sometimes called a double-option agreement) between the shareholders, giving each side the right to buy or sell the deceased shareholder's stake. Second, the policies, sized to the value of each share, written so the surviving shareholders have the cash to buy. We set up the policies and work with your accountant or solicitor on the agreement.

Relevant life policies can offer tax advantages for some directors and employees. Tax treatment depends on individual circumstances and current legislation, which may change. Personal life cover is simpler and portable if you change company. We model both before recommending.

Group cover usually makes sense once the headcount passes around five to ten employees, where individual underwriting becomes administratively painful. Group life is cheap to add and is a meaningful retention benefit. Group income protection costs more but funds long-term sick pay and supports return to work.

Treatment varies by product. Key person and business loan premiums are usually a deductible business expense, with the payout taxed as a trading receipt. Relevant life premiums are deductible with no benefit-in-kind charge and the payout written into trust. Group life and group income protection are usually deductible. We walk you through the position for each policy with your accountant.