Keyperson Cover
It is, however, possible to get insurance for key employees against both death and critical illness. In the same way as you get personal cover against death or illness, key employees can be covered by what is known as 'keyperson cover'. This can then be used to soften the blow to the business caused by the death or illness of an employee. There would be a lump sum, which the company could use to train up an employee or recruit a replacement, or simply to cover the profits until things settle down again.

The taxman can help
Tax relief can often be claimed on the premiums for a keyperson policy if three conditions are met: there must be an employer/employee relationship; the policy must be of a short-term nature; and the sum assured must be a reasonable amount and designed to cover loss of revenue rather than a capital sum.

Partners and shareholders
Another problem small businesses can face is when partners or shareholders become ill or die. If a partner or shareholder dies, it is important to have made arrangements to ensure these events will not tear the business itself apart. This is called 'partnership or share protection'. If partnership/share protection is not in place, on the death of a partner or shareholder their share of the business will go to whoever inherits under their Will. There is no guarantee, however, that the family will wish to fill the partner's/shareholder's role in the business - they might even want to sell their interest in the business. If their share of the business is sold to a third party, you could find yourself with a new partner/shareholder who has quite different ideas from your own.