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Share & Partnership Protection

Share Protection and Partnership Protection, can help business owners keep control of their company if one of them dies or is diagnosed with a critical illness; it also ensures the deceased’s family are fairly treated.

The cover you recommend depends on the business set-up:

  1. Share Protection is for limited companies (life insurance taken out on the life of the company’s shareholders)
  2. Partnership Protection is for partnerships and limited liability partnerships (life insurance taken out on the lives of the business partners)

Both can also include our critical illness cover – which is one of the most comprehensive in the market.


Key features of Critical Illness Cover include:

  1. Pays out a lump sum if the shareholder or partner is diagnosed with a specific illness or retains an injury covered by the policy, and survives for at least 14 days
  2. Covers up to 64 conditions including 44 full payment, 20 additional payment conditions and 15 ABI+ definitions providing wider coverage (and so a greater chance a claim will be paid) than the standard ABI definitions
  3. Broader claim definitions so we can pay more claims or pay them quicker
  4. Enhanced claim payments for 16 conditions
  5. Flexible cover options.

Setting up cover

How the cover is set up will depend on the type of the business. You should recommend Share Protection to limited companies and Partnership Protection to partnerships and limited liability partnerships.

To find out more about these options including information on cross option agreements and premium equalisation, see our adviser brochure.

Business type

Who should be insured

Benefits

How to set up the cover

Limited companies

Shareholders

The remaining business owners keep control of the company (control isn’t passed onto anyone else).

The deceased's estate can sell their shares at fair market value. Without a life insurance backed arrangement (including a cross option agreement) the future of the business and the possibility of the estate being treated equitably can be thrown into doubt.

The arrangement is tax-efficient.

Own life: each shareholder or partner takes out a plan on their own life which is written in trust for the other business owners. Each shareholder or partner signs a cross option agreement. The remaining partners use the money paid under the claim to buy the shares.

Life of another: if there are just two business owners, they can take out life-of-another plans on each other. The owners also sign a cross option agreement. The claim is then paid to the remaining business owners who use the proceeds to purchase the deceased’s shares.

Limited Liability Partnerships

Partners/Members

Partnerships

Partners


How much cover to recommend

Valuing a company can be difficult and surviving shareholders will need enough money to purchase the lost business owner’s shares. In the absence of an accountant’s valuation, as a guide, you should consider looking at the following when setting the cover.

  1. Net profit from the last 3 years
  2. Assets (such as property, vehicles, specialist equipment)
  3. Liabilities
  4. And price earnings ratio (assuming future performance)

In general, the amount of cover you recommend should equal the market value of each owner’s share of the business.

Use our Premium Equalisation calculator as a guide for recommending cover.


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Business Protection options

Find out more about the type of businesses we cover and the policies available.

More on Business Protection options

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Tools and calculators

See all our business protection calculators available to simplify your client conversations.

View all tools and calculators

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Business Protection support

Our team will make sure that all your Business Protection applications are dealt with quickly and efficiently.

More on Business Protection support

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Why choose LV=

Your clients can access a range of resources and expert advice, as well as a number of value added services.

More on why to choose LV=

FOR UK FINANCIAL ADVISERS ONLY
LV=, County Gates, Bournemouth, BH1 2NF, UK