Business protection for company directors
A director's mortgage rests on the company's profits. The key person, shareholder and relevant life cover you can advise on, and the shares, estate and pension questions that belong with a planner.
A director's mortgage rests on the company's profits. The key person, shareholder and relevant life cover you can advise on, and the shares, estate and pension questions that belong with a planner.
A company director's affordability is assessed on what the company pays them, and sometimes on their share of its profits. If the company loses a key person, or the director dies with no arrangement for their shares, the income supporting the mortgage can stop.
Business protection addresses those risks. Where your firm holds permission to advise on and arrange non-investment insurance, the protection advice is yours.
Key person cover pays the company if a named person dies or, depending on the policy, becomes seriously ill. The company uses the money to cover lost profits, recruit a replacement or repay business debts.
The tax treatment of premiums and payouts depends on the purpose of the cover and the facts. The company's accountant advises on it. Record that you told the client to check the tax treatment with their accountant.
Size the cover against a measure the company can justify, such as the person's contribution to profit or the cost of replacing them, and record how you reached the figure.
When a shareholding director dies, their shares pass under their will. The family may want cash, and the remaining owners may want control. Shareholder protection provides the money for the remaining owners, or the company, to buy the shares.
Cover on its own does not make the purchase happen. The owners need an agreement, usually a cross-option agreement, setting out who buys and who sells. That agreement is a legal document for a solicitor. Without one, the cover can pay out while the shares stay with the family.
Relevant life cover is a life policy paid for by the employer for an individual employee or director, written in trust for their family. It provides death-in-service cover for a company too small for a group scheme, or for a director who wants cover outside one. It can suit a director whose mortgage is supported by company income, and whose family needs the debt cleared on death.
The policy has conditions on who can benefit and how it is written. Advise on it within your permissions, and write it in the correct trust.
Relevant life cover pays a lump sum only on death or terminal illness. It does not provide a pension or an income, and it ends when the director leaves the company.
Shares in an unlisted trading company can qualify for business relief from inheritance tax. Since 6 April 2026, full relief applies up to an allowance, with relief at a lower rate above it. Directors with valuable shareholdings may have an estate exposure they have not considered.
How the shares pass, whether the will matches the shareholder agreement and how business relief applies are estate planning questions. A planner works on these with the client's solicitor and accountant.
A company can pay into a director's pension as an employer contribution. Where the contribution meets the wholly and exclusively test, the company deducts it before corporation tax. Contributions count towards the director's annual allowance of £60,000, which is lower for some high earners, with carry forward of unused allowance from the previous three years where the conditions are met.
Employer pension contributions reduce company profits, which can affect affordability with lenders that assess a share of net profit. Timing a large contribution around a mortgage application is a question for you, the planner and the accountant together.
A sole trader has no company to pay for cover, and no shares to pass. Their business protection is their personal income protection and life cover, and their business may end on their death. A partnership or LLP has its own equivalents: partnership protection funded by the partners, and a partnership agreement setting out what happens on a death.
For each, ask whether the agreement between the owners deals with death and serious illness, and whether the client's will matches it. If the answer is no or unclear, the agreement is a matter for a solicitor, and the planning around it is a matter for a planner.
the mortgage, key person cover, shareholder protection and relevant life cover, within your permissions.
the tax treatment of premiums, how the director is paid and the company's accounts.
the cross-option agreement, the articles and the director's will.
the director's pension, investments and estate planning, including business relief.
Offer the introduction at the end of the protection review: "We have covered the business risks on the protection side. How your shares pass on and how your pension is funded through the company are planning questions I do not advise on. A planner at Equity & General can look at them with your accountant."
Where your firm holds permission to advise on and arrange non-investment insurance, yes. The cross-option agreement is a legal document for a solicitor, and the tax treatment is for the accountant.
No. It is a life policy paid for by the employer and written in trust. It does not count towards the director's pension allowances.
Shares in a trading company can qualify for business relief from inheritance tax, subject to the allowance that has applied since 6 April 2026. Planning around it is estate planning advice, which E&G gives.
A longer term lowers the monthly payment and moves the end of the mortgage past the client's working life. What lenders ask, what your file needs to show, and where the retirement income question goes.
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Clients ask their broker whether to overpay the mortgage with a bonus or savings. The parts of that question you can answer, the comparison you cannot, and how to hand it over.
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Six points in an ordinary mortgage case where a wider financial conversation opens naturally, and how the introduction to Equity & General handles each one.
Read itYour firm keeps the mortgage and protection advice. Equity & General gives the pension, investment and estate planning advice, and a named partnership manager sets the arrangement up with you.