Partnership Protection
Protect your partnership and ensure business continuity if a partner dies.
Partnership Protection allows surviving partners to purchase the share of a deceased or critically ill partner, keeping the business intact and preventing the share from passing to the partner's estate or family members who may not be involved in the business.
What is Partnership Protection?
Partnership Protection is similar to Shareholder Protection but designed for partnerships and LLPs rather than limited companies. Each partner takes out a life insurance policy on their own life (or the lives of other partners), with the proceeds used to fund the purchase of the deceased partner's share. It is typically arranged alongside a Partnership Agreement that sets out the terms of any buyout.
Who is it suitable for?
Key Benefits
Tax Considerations
The tax treatment of Partnership Protection depends on how the policy is structured. Premiums paid personally by each partner are generally not tax deductible. However, the payout is typically used to fund the purchase of the deceased's share, and Business Property Relief may apply to reduce the inheritance tax liability on the partnership share. Tax advice should always be sought.
Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Example Scenarios
Two-partner accountancy practice
Two partners in an accountancy practice each take out life insurance on the other's life. If one dies, the surviving partner receives the payout to buy out the deceased's share from their estate, allowing the practice to continue.
LLP with multiple partners
A law firm with five partners arranges Partnership Protection so that if any partner dies, the remaining partners have the funds to purchase their share — maintaining the firm's ownership structure.
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Why Choose JK Insurance Brokers?
- Whole-of-market access
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