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Help keep business owners keep control of the company if one of them dies or is diagnosed with a critical illness.

Share Protection and Partnership Protection

Share Protection and Partnership Protection is sometimes referred to as ‘Owner’s Insurance’ and help business owners keep control of the company if one of them dies or is diagnosed with a critical illness.

Features included as standard

  • Pays a cash lump sum if the shareholder or partner insured dies
  • Terminal illness cover included at no extra cost
  • Guaranteed premiums

Options

  • Critical Illness cover
  • Level, decreasing or Inflation-linked cover
  • Waiver of premium

Product profile

Additional services

  • Access to the LV= member helpline gives 24/7 access to health advice, counselling services and expert legal advice
  • LV= Doctor Services which gives gives your clients access to 3 expert medical advice services through one handy app wherever they are
  • LV= Business Care which gives your clients free access to legal and tax experts available at the end of the phone, when they need them

A closer look...

Share Protection is life insurance taken out on the life of the company’s shareholders. It can also include critical illness cover, which will pay out a lump sum if the shareholder is diagnosed with a specific illness or injury covered by the policy, and survives for at least 14 days. In the event of a claim, the proceeds from the policy give the remaining shareholders the money needed to buy the shares, helping retain control of the business.

If the key person insured is diagnosed with a terminal illness, their priorities may change and could decide to stop working and concentrate on the things that matter to them the most- family, missed life experiences or even just be too unwell to work. When this happens we'll pay the sum assured early.

What is a terminal illness?

This is an incurable illness, where in the opinion of an attending medical consultant and our Chief Medical Officer, they would not be expected to live for more than 12 months.

The premium is guaranteed. This means we won’t change it unless you ask us to change the policy or, unless you inflation-linked cover has been chosen.

Inflation-linked cover your cover will increase by inflation each year and premiums will increase by inflation multiplied by 1.5.

All of our features are covered in full in our policy documentation.

Details

Life Protection

Life and Critical Illness cover

Waiver of Premium

Additional features

N/A

  • Children's critical illness cover
  • LV= Legal & Wellbeing line
  • Business Protection cover

N/A

Type of pay-out

Lump sum

Lump sum/s including our additional payment claims

Pays your plan monthly premiums after the waiting period

Types of cover

Level/inflation-linked/decreasing

Level/decreasing/inflation-linked

N/A

Term

Between 5 and 45 years

Between 5 and 50 years

Age 69 or the end of the plan term if earlier

Minimum age attained at entry

17 years

17 years

17 years

Maximum age attained at entry

59 years - inflation-linked cover

79 years - level/decreasing cover

59 years - inflation-linked cover

64 years - level/decreasing cover

59 years

Maximum age attained at end of policy term

84 years

59 years - inflation-linked cover

79 years - level/decreasing cover

69

Minimum premium

£5 a month

£5 a month

Based on the total plan premium

Waiting period

None

N/A

6 months

Eligibility criteria

Your client must be a permanent UK resident

Your client must be a permanent UK resident

Your client must be a permanent UK resident

Number of Critical Illnesses covered

N/A

87* conditions including:

  • 38 additional payment conditions
  • 17 enhanced payment conditions

*20 of these conditions are covered under 1 additional payment condition - 'less advanced cancers'

N/A

A quick guide to Share Protection and Partnership Protection

Share Protection and Partnership Protection is sometimes referred to as ‘Owner’s Insurance’ and helps business owners keep control of the company if one of them dies or is diagnosed with a critical illness. The cover you recommend depends on the business set-up:

  • Share Protection is for limited companies
  • Partnership Protection is for partnerships and limited liability partnerships

How to position Share and Partnership protection with clients

Losing an owner can have a huge impact on the day-to-day running of a business, and can quickly result in financial difficulties. Boardroom confusion can lead to conflict in decision making, as the surviving owners and the deceased’s family may have very different ideas about the future of the business. Other potential problems include:

  • If the shares are sold on the open market, a new business owner could take-control of the day-to-day running of the business. That new business owner could be a competitor or completely unsuitable for the business
  • If the deceased owner's family are willing to share the shares, the surviving owners could have trouble raising the finances and disagreements over the terms of the sale could lead to further difficulties
  • Uncertainty over ownership may cause banks and investors to re-structure or cancel funding

Top tip

We recommend you review your client’s protection requirements regularly to take into account any changes in business value or shareholding.

Cover by business type

Key Person Cover should be set up differently to match the needs of different business types. The table below can help show how Key Person Cover is best applied and how to get the most out of our policy.

Who should be insured

Shareholder

Benefits

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

The sold shares get fair value – without available capital (and a cross option agreement) the shares could be sold by the deceased owner’s family at below market value (for a quick sale).

The arrangement is tax-efficient.

How to set up the cover

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 only two or three 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.

Who should be insured

Partner

Benefits

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

The sold shares get fair value – without available capital (and a cross option agreement) the shares could be sold by the deceased owner’s family at below market value (for a quick sale).

The arrangement is tax-efficient.

How to set up the cover

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 only two or three 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.

Who should be insured

Partner

Benefits

The remaining partner/partners keep control of the company.

How to set up the cover

Own life: each partner takes out a plan on their own life which is written in trust for the other business owners.


How much cover

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.

  • Net profit from the last 3 years
  • Assets (such as property, vehicles, specialist equipment)
  • Liabilities
  • 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.

If a business had four partners each with an equal share, you might expect the owners to each pay 25% of the total premiums. However, if one partner is older, or has pre-existing conditions, the premiums will increase (just like personal protection). Premium equalisation makes sure business owners who take out Share or Partnership Protection only pay an amount that is commercially relative to the benefits they stand to gain.

It’s important to equalise premiums; missing out this essential step means any money paid under a claim could be liable to income inheritance tax (HMRC consider premium equalisation essential for commercial arrangements).

Our easy-to-use LV= Premium Equalisation Calculator helps you split the overall premium costs between the business owners, according to their individual share and protection risk. If using the calculator, print off two copies of the report, one for your client’s accountant and one for your own file.

We’ve developed a number of calculators to help you successfully position and recommend Business Protection.

  1. Our Business Valuation calculator has been designed to help you and your client value the business accurately. This calculator calculates the potential value of the business by using the average net profits, net assets and a profit multiplier.
  2. The Premium Equalisation calculator will show you how to split the premium costs fairly between the shareholders or partners, taking into account their shareholding, age and health. The principle behind equalisation is that each individual should pay a commercial amount relative to the benefit they or their family is likely to receive.
  3. Our Business Risk calculator will help you demonstrate the likelihood of health issues affecting key people, as well as the financial impact this would have on the business.

Head over to the tools and calculators area to get started.


An example of how Share Protection could safeguard a growing business

Losing an owner can have a huge impact on the day-to-day running of a business, and can quickly result in financial difficulties. Boardroom confusion can lead to conflict in decision making, as the surviving owners and the deceased’s family may have very different ideas about the future of the business

The example below shows how Share Protection cover can be used to help clients who want to secure the a growing business if something happened to one of their partners. Please note that this is an example only and is not based on a real company.

Clive

Clive

Simpson & Partners

The business is worth £1,500,000 and each partner has an equal share. In the event of one of them dying before retirement, the business owners want the option to be able to buy the deceased partners shareholding.

John and Charlotte

John and Charlotte

green arrow pointing down
Green tick in a circle

Scenario 1

The partners take out Partnership Protection £500,000 life insurance on an own life basis.

green arrow pointing down
  1. Clive dies unexpectedly.
  2. The £500,000 benefit is paid to the surviving partners. The money (and cross option agreement) means the partners can buy out the share of their late colleague.
  3. Clive’s family receive pre-agreed fair value for their loved one’s share of the partnership.
  4. The business carries on trading.
Red arrow pointing down
Red cross in a circle

Scenario 2

The company doesn't take out Partnership Protection.

Red arrow pointing down
  1. Clive dies unexpectedly.
  2. The remaining partners don’t have the funds available to buy the deceased’s share.
  3. Clive’s family are unable to efficiently realise the value of their loved one’s share of the partnership.
  4. The future of the partnership is thrown into doubt as ownership is diluted and decision making becomes difficult.

Background

  1. Traditional partnership with three partners.
  2. Equal share of £500,000 each.
  3. Insufficient capital to cover each partners' share at short notice.

Simpson & Partners is a legal firm with three partner solicitors and more than twenty staff, and has grown considerably over recent years. All three partners have an equal share in the business and considerable influence in the company’s day-to-day running and success. Each partner has a share of the business valued at £1,500,000.

The partners are all currently fit and healthy, in their mid-40s, and don’t expect to retire for another twenty years. As solicitors, they understand why Business Protection is important – they also realise if one partner where to suddenly die, there would be no available capital to buy the deceased’s share, exposing the business to considerable risk.

Share Protection solution

After meeting their Financial Adviser, Simpson & Partners take out Partnership Protection in the form of three separate life insurance policies, on an own life basis written in trust for the other partners. Each policy would pay out £100,000 to the remaining business owners if one of them died before retirement. And a cross option agreement is also signed giving the remaining partners the option to buy the deceased’s share of the business while allowing the family to efficiently sell it.

Five years later, one of the partners dies unexpectedly and the surviving business owners make a claim, providing them with the capital needed to buy the deceased partner’s share. The cross option agreement ensures this process happens as smoothly as possible.

Without Partnership Protection, the surviving partners would not have had the money needed to buy the deceased’s shareholding meaning the deceased partner’s family could have sold it on the open market, undervalued and to a competitor (or other unsuitable buyer).

Great reasons to choose LV= for Key Person Cover

Strong claims performance

Making sure your client has a successful claim is as important to your client as it is to you. Your clients get vital financial help when they need it most and you feel confident in the provider you recommended.

We’re proud of our performance with 99% across our Life products* and 88% of Critical Illness claims paid in 2019. The average amount paid for a Life insurance claim was £59,609 (excluding our 50 Plus whole of life product), and the average for a Critical Illness claim was £71,296.

*Our Life Insurance figures include claims paid for our Life Insurance, Terminal illness, and whole of life products. Our whole of life products are no longer available.

Better underwriting

We know advisers are not usually medical experts so we help out as much as we can. This means you can concentrate on providing the best financial advice for your client.

  • We have no standard exclusions on our income protection plans making it straightforward to explain to your client.
  • Our online application system is powered by a strong, intelligent underwriting rules engine which means that you're more likely to get an instant decision.
  • We have flexible medical examination arrangements. If your client needs a medical examination, we could send a nurse to visit them at home or work or use a medical examiner at a convenient location.
  • We pay for medical underwriting (except medical certificates such as sick notes).
  • We have a dedicated underwriting hotline to help you iron out any potential issues your client may have.
Value add services

LV= Doctors services

LV= Doctor Services gives your clients access to six medical services via one simple app or phone call:

  • Remote GP
  • Prescription Services
  • Second Opinion
  • Remote Physiotherapy
  • Remote Psychological Services
  • Discount health MOTs

Member benefits

Every client who takes out one of our personal or business protection and retirement products will agree to become a member of LV=. This means they are entitled to a range of added benefits and support. These include free and unlimited access to our 24/7 confidential member helpline and discounts on a number of LV= insurance products.

Our LV= member helpline gives you 24/7 access to health advice, counselling services and expert legal advice.


LV= Business Care

LV= Business Care is designed for small business owners and is available as soon as your client takes out LV= Business Protection cover. Our service gives your clients free access to legal and tax experts available at the end of the phone, when they need them.

Our service offers advice in two key areas, Legal and Tax;

Business legal advice

Direct access to legal experts specialising in business and commercial law; covering areas such as;

  • Employment law and tribunal claims
  • Health & Safety law and requirements
  • Disputes including tenancy and debt recovery
  • Commercial and contractual disputes

Advice is available 24 hours a day, 7 days a week

Business tax and VAT advice

Direct access to business tax and VAT experts made up of accountants and ex HMRC employees, covering areas such;

  • Tax and VAT relief
  • Completing a self-assessment return
  • Current and changes to tax rules
  • Dividends paid from limited companies
  • Receiving a tax investigation notice

Advice is available Monday-Friday 9am-5pm

When setting up key person cover we recommend that you use our Business Risk calculator to bring to life the likelihood of health issues affecting key people within the business and the subsequent financial impact. Our Key Person Cover calculator will help you in recommending the correct amount of cover for each key person.

Suitability wording

We’ve produced a range of template paragraphs that are designed to describe generic features of each type of policy, as well as the specific benefits of our own products. You can use and adapt these paragraphs to help construct your own Suitability Letters.

Use the drop down menu to select the relevant section, then copy and paste it into your suitability letter.

 

A good suitability letter is:

  • your opportunity to justify and reinforce the reasons for your advice and recommendations
  • an excellent opportunity to document unmet and future needs and the importance of ongoing review discussions
  • your record of the discussions held and the recommendations made/not made and why

It should be clear, fair and not misleading. It should be personal, explain the reasons why a recommendation has been made and how it meets the customers needs and objectives. It should highlight any risks involved.

LV= has taken care to ensure the accuracy of the information at the time of issue but does not accept liability resulting from your use of it.

Calculators

Choice calculators to support your discussions

When setting up Share or Partnership Protection, it's essential to understand the potential value of the business. This helps to set the sum assured for cover purposes.

When setting up protection for shareholders or partners, the cost of cover is often shared (or equalised) between them. This calculator quickly works out how to fairly split the total premium cost between the shareholders or partners, relative to the benefits they stand to gain.

As this an integral part of setting up such an arrangement, therefore the calculations also need to be shared with the company’s accountant to check and implement.

How we use personal information. Find out how we use your personal information, and what rights you have by visiting How we use your personal information. This includes who we are, how long we hold information, what we do with it and who we share it with.

Underwriting support

Pre-underwriting helpline

Go straight through to our underwriters who can quickly answer questions like exclusions or loading.

Email: [email protected]
Call: 0800 678 1893
8:30am to 6:30pm Monday to Friday
TextDirect: first dial 18001

Tele-interview service

Our underwriters may need more information about a particular disclosure.

Our team of friendly, fully trained UK based tele-interviewers, will call your client to gather details of their health and medical history so we can assess their application. This usually takes between 20-30 mins.

You can read our Tele-interview guide to help prepare for ain interview.

Tele-interview booking service

You or your client can book a tele-interview appointment with us directly online within 30 mins, without having to contact our new business team.

  1. It's usable as soon as you have the policy number.
  2. It shows all of the appointments available.
  3. You can book appointments as early as an hour after submission or up to seven days in advance.
Pre-underwriting tool

What is it?

Our Pre-Underwriting Tool, part of Fastway, allows you to enter illnesses and conditions (disclosures) giving instant, indicative underwriting decisions at any time.

Where to find the tool

  1. Log into Fastway
  2. Choose "New Pre-UW Enquiry" at the top of the page
  3. Refer back to the decision by accessing the record’s unique ID in your Fastway dashboard
Underwriting and financial limits

Life Insurance underwriting limits

Age next birthday

PSR*

Cotinine**

GPR

ME

HIV

BIOCHEM

PROF

HbA1c

EXECG

To age 35

£750,001

£900,001

>£1m

>£2m

>£1.5m

>£2m

N/A

N/A

>£7.5m

36-40

£600,001

£900,001

>£1m

>£2m

>£1.5m

>£2m

N/A

N/A

>£7.5m

41-45

£500,001

£800,001

£750,001

>£2m

>£1.5m

>£2m

N/A

N/A

>£5m

46-50

£400,001

£700,001

£600,001

>£1m

>£1.5m

>£1m

N/A

N/A

>£4m

51-55

£250,001

£550,001

£400,001

>£1m

>£1.5m

N/A

>£1m

>£1m

>£3m

56-60

£200,001

£450,001

£300,001

£750,001

>£1.5m

N/A

>£1m ***

>£1m

>£2m

61-65

£100,001

£250,001

£150,001

£500,001

N/A

N/A

>£1m ***

>£1m

>£1.5m

Over 65

£75,001

£150,001

£100,001

£250,001

N/A

N/A

>£1m ***

>£1m

>£1m

* PSR not required if ME required. ** Cotinine required on non smokers only. *** PSA included

Make a claim

Making a claim on behalf of your client

You can contact us in the following ways to notify us that your client wishes to make a claim;

  1. phone: 0800 756 5869
  2. email: [email protected]
  3. post: LV= Health Claims Team, Emperor House, Grenadier Road, Exeter Business Park, Exeter, EX1 3LH

The information we need

For most claims, we’ll send your client a claim form. This should be completed, and include the name and contact details of your client's GP or medical specialist, as well as any supporting medical or financial evidence requested in the claim form. We may also ask for:

  • Basic details of the reason your client is unable to work.
  • Financial evidence as detailed in the claim form.

Paying the claim

  1. We’ll keep your client (and you) informed throughout the claim.
  2. We'll contact your clients GP or medical specialist directly to follow up on any outstanding requests for medical evidence.
  3. We’ll let your client know if there’s anything they can do to speed up their claim payment.
  4. We’ll normally pay the claim within 48 hours of receiving all the required evidence and making a final decision.
  5. We offer your client free access to a medical second opinion from one of the UK’s biggest networks of medical professionals through LV=’s partner Square Health.
Claims performance

99%* of all new life insurance claims were paid in 2019

Here at LV=, we offer a clear and fair approach to paying claims, as we believe anyone can be affected by long-term illness – regardless of age or lifestyle. Take a look at our full 2019 claims performance.

Protection summary 2019

Life**

Critical Illness

Total value of claims paid

£38.8m

£23m

Average annual benefit/payment

£59,609

£71,296

Highest annual benefit/payment

£584,000

£534,775

Policy in force duration

9 yrs 5 mths

7 yrs 6 mths

Ave. age customer at claim

Life*

Critical Illness

Male icon

Male

72

51

Female icon

Female

73

47

An icon of a man and lady

Youngest customer

28

29

*Our Life Insurance figures include claims paid for our Life Insurance, Terminal illness, and whole of life products. Our whole of life products are no longer available.

**The figures in this table exclude our non-underwritten whole of life policies

Telephone icon

Contact us about Share Protection and Partnership Protection

Quotes and questions: 0800 678 1890

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