Partnership Protection Insurance | Spectrum FA Business Protection

The Importance of Partnership Protection Cover

The purpose of Partnership Protection Insurance is to protect your company against the risk of a business partners’ death, terminal illness or critical illness.

When a shareholder or partner passes away, there is a good chance their family members inheriting their share, have no interest in or knowledge of the business. The share of the business could subsequently end up being sold to competitors.

Partnership Protection Insurance provides funds in the form of a tax free lump sum enabling remaining partners or shareholders to purchase the deceased shareholder’s stake in the business.

If critical illness is included in the life policy, the insured individual can, if diagnosed with a specified critical condition, sell his/her shares to partners immediately without the stress of partners having to find the required financial resources.

Contact us today for a fee-free, no obligation quote to find out how easy it could be to protect your business and secure your future.

To find out more, continue reading our frequently asked questions (FAQs) towards the end of the page.

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View some of our frequently asked questions that some of our customers have asked.

What is Partnership Protection Insurance?

Frequently referred to as director share, ownership or shareholder protection, Partnership Protection Insurance is instrumental in making sure that, in the event of a business partner dying or developing a critical illness (if selected), remaining shareholders or partners can buy the insured individual’s share in the business. This, of course, enables them to retain control of the business and ensure it continues running smoothly.

Policies are set up on a life of another basis or on an own life basis and placed in a suitable trust, for the benefit of the remaining business partners.

What are the benefits of Partnership Protection?

With this type of insurance, you will be able to insure your company and the business owners/partners, by providing a lump sum payment that will allow surviving partners to purchase the deceased owner’s interest in the business.

The life cover, which is sometimes referred to as Partnership Insurance, can ensure the remaining business owners in the event of the death of a partner have the necessary funds to buy back the share of the business from the deceased owner’s next of kin.

The remaining business partners are able to remain in control over the business and the deceased owner’s family will receive a lump-sum payment, equivalent to the value of the deceased partners’ interest in the business.

What are the key features of Partnership Protection?

The key features include:

In the event of the death, critical or terminal illness of a business partner, funds are available to the remaining business owners.

This allows the remaining owners to purchase the share of the business back from the deceased owner’s next of kin.

The deceased owner’s next of kin will then receive a lump sum payment and the remaining business owners are able to retain 100% control of the business.

Who is eligible for Partnership Protection?

Cover is aimed at traditional partnerships where there is usually a partnership agreement and limited liability partnerships (LLP).

How much does Partnership Protection Cost and who pays the premiums?

Insurance premiums are paid for by the individual partners, or the partnership or LLP and depend on the following factors:

  • Age of the individual to be insured
  • Smoker status
  • Medical history & current lifestyle
  • Level or amount of cover – this needs to be set at a suitable level based on value of the business partners interest in the business
  • Term or length of the policy
  • Which, if any, other add-ons/optional extras are selected, including critical illness insurance

Premium rates also vary not only between policies but also between the various providers in the market, so it is important to obtain expert advice.

Spectrum Financial Advice will recommend the right type of insurance policy, a suitable level of cover and discuss the optional extras/add-ons to protect your business against the loss of a partner – effectively and at the most affordable premiums possible. Contact us today to find out how.

What are the consequences of not having Partnership Protection?

If a business does not have suitable Partnership Protection Insurance in place, there could be serious consequences, not only for the business and remaining partners, but also the deceased partner’s family.

The insurance cover offers the remaining business partners the financial resources, by providing them a lump sum payment that will enable them to remain in control of their business.

Without suitable protection or available funds, with an LLP the beneficiaries or estate of the deceased business partner will be entitled to a share of the profits. An LLP will continue and if there is no formal partnership agreement for a partnership, it will dissolve on the death of a partner and their beneficiaries or estate will be entitled to their share of the business.

How can Spectrum FA help?

Spectrum FA’s experienced advisors have helped many company partners protect their businesses against critical illness and death. Discover how easy protecting your business is and arrange a free, no-obligation review today.

  • Flexible Cover – Spectrum FA will ensure your cover is tailored to suit your shareholders’ specific circumstances by providing advice on a variety of available policy options.
  • Peace of Mind – Ensuring your plan covers all of your company’s relevant partners, Spectrum FA give your company, it’s partners and their family peace of mind.
  • Competitive Premiums – Being independent, we have access to market-leading insurance providers enables us to advise your company on the correct cover at competitive premiums.

We provide expert regulated advice and will tailor the right cover to match the circumstances of you and your business. We do not charge you a fee for our advice or service and you will speak directly to an expert who will guide you through the process and handle all the paperwork on your behalf.

To find out more from one of our advisors, or to arrange your free no-obligation review, please use our online contact form or email: or call us on 01279 315 013.

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