Business Life Insurance for Company Directors and Business Owners

Business Life Insurance

For most limited company directors, the main options are relevant life insurance, key person insurance, shareholder protection, group life cover and business loan protection. This page walks through each type, who it pays out to, how the tax typically works in the 2026/27 tax year and what it could cost compared with a personal policy. It's written for UK directors weighing up life insurance for business owners, so you can protect your family and your business without paying more tax than you need to.

Key facts

• In the UK, company-paid life cover comes in five main policy types: relevant life, key person, shareholder protection, group life (death in service) and business loan protection.
• Relevant life insurance premiums are typically an allowable business expense for the company, with no benefit-in-kind charge for the director covered.
• UK corporation tax for 2026/27 is 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief in between.
• For a higher-rate taxpayer in 2026/27, a £100 monthly personal life policy needs £207.52 of pre-tax company profit to fund, compared with £100.00 through relevant life: £107.52 less each month.
• Sole traders and partners cannot use relevant life insurance and normally need personal life cover instead.
• Executive Life is authorised and regulated by the Financial Conduct Authority (FRN 985058).

Who needs business life cover?

Business life cover is most useful for limited company directors, shareholders in businesses with more than one owner, employers who rely on their team, and companies with loans or overdrafts. If any of these describe you, at least one type of company-paid life cover is likely to be worth a look.

• Limited company directors who want family life cover paid for by the company.
• Co-owners who want the surviving shareholders to be able to buy back a deceased owner's shares.
• Employers who depend on key people, or who want to offer death in service to staff.
• Businesses with loans, overdrafts or directors' personal guarantees.

Sole traders and partners have fewer options, because in most cases the owner and the business are not separate legal entities in the way a limited company is. Our guide to life insurance for small business owners explains the choices for each business structure.

What are the main types of business life insurance?

There are five main types in the UK. Each one answers a different question: who would suffer financially if you, a co-owner or a key employee died, and who should receive the money? Here's how each type works, who owns it and who gets paid.

Relevant life insurance: personal life cover paid for by your company

Relevant life insurance is an individual death-in-service policy for one director or employee, owned and paid for by the company. The payout goes into a discretionary trust for your family, not to the business. HMRC sets out how these policies work in its Employment Income Manual (EIM15045), and premiums are typically an allowable business expense with no benefit-in-kind charge.

Owned by: the company. Pays out to: your family, through a trust. Purpose: replacing your income for your loved ones. Cover is often available up to 15 to 25 times your total remuneration, depending on the insurer and your age. Find out more about relevant life insurance.

How much does relevant life insurance cost?

Relevant life insurance is priced in the same way as personal life cover, on your age, health, smoker status, the amount of cover and the term. As a guide, a healthy non-smoking male director taking out £500,000 of level cover over a 25-year term would pay around £23.71 a month at age 35, £31.98 a month at age 40 and £60.93 a month at age 50, based on the lowest guaranteed premium across our insurer panel. These are indicative premiums from quotes sourced on 1 August 2026, and your price will depend on your health, occupation, lifestyle and underwriting.

Key person insurance: protecting profits if a key person dies

Key person insurance pays a lump sum to your business if someone whose skills, contacts or leadership drive its profits dies. The company owns the policy, pays the premiums and receives the payout, which it can use to cover lost profits, recruit a replacement or reassure lenders and customers.

Owned by: the company. Pays out to: the company. Purpose: protecting profits and stability. Whether premiums are tax deductible depends on why the cover is in place and who the key person is, following HMRC's Business Income Manual guidance (BIM45525).

If the business would struggle without one or two people, our page on key person insurance explains how cover levels are usually worked out.

How much does key person insurance cost?

Key person insurance premiums are based on the age, health and smoker status of the person insured, the amount of cover and the policy term. As a guide, £250,000 of level key person life cover over a 10-year term for a healthy non-smoking male director costs around £11.20 a month at age 40, £25.11 a month at age 50 and £68.86 a month at age 60, based on the lowest guaranteed premium across our insurer panel. These are indicative premiums from quotes sourced on 1 October 2026, and adding critical illness cover increases the cost.

Shareholder protection: keeping ownership in the right hands

Shareholder protection gives the surviving owners the money to buy a deceased shareholder's shares from their estate. Control stays with the people running the business, and the family receives a fair cash value instead of a stake they may not want. It normally sits alongside a cross-option agreement, which gives both sides a binding right to complete the sale.

Owned by: the company, with a policy on each shareholder written into a shareholder protection trust. Pays out to: the trust, which distributes the funds to the surviving shareholders pro rata. Purpose: keeping ownership in the right hands. The company pays the premiums, which usually creates a benefit-in-kind charge for the shareholder covered. See how shareholder protection works in practice.

How much does shareholder protection cost?

Shareholder protection is priced on the age and health of each shareholder and the value of their stake. For example, a shareholder with a 50% stake in a business worth £2 million would need around £1,000,000 of cover, which for a healthy male director costs around £60.64 a month at age 40, £82.30 a month at age 45 and £119.44 a month at age 50. These figures come from quotations created on 1 August 2026 and are indicative only; adding critical illness cover increases the premium.

Group life insurance and death in service: cover for your team

Group life insurance, often called death in service, covers your employees under one company scheme. If an employee dies while they work for you, the scheme pays a lump sum, usually through a trust, to their family. The benefit is normally set as a multiple of salary, such as two to four times.

Owned by: the company, through a scheme trust. Pays out to: the employee's family. Purpose: a valued employee benefit that helps you recruit and keep good people. Premiums for a registered scheme are usually an allowable business expense. Our guide to group life insurance for small businesses covers how to set one up.

Very small companies may not meet an insurer's minimum number of employees for group life. In that case, individual relevant life policies can give each director similar cover.

How much does group life insurance cost?

Group life premiums are priced on the scheme as a whole, so the cost depends on how many employees you cover, their ages and salaries, and the multiple of salary you choose as the benefit. Our guide to how much group life insurance costs explains the main pricing factors in more detail.

Business loan protection: clearing company debts

Business loan protection pays off, or helps pay off, company borrowing if a director or key person dies. It stops a lender calling in a loan at the worst possible time and can take the pressure of a personal guarantee off your family.

Owned by: usually the company. Pays out to: the company, to repay the lender. Purpose: clearing debts. The tax treatment of premiums depends on what the loan was used for, so check it with your accountant and adviser before you take cover out.

How much does business loan protection cost?

Business loan protection premiums depend on the size and length of the loan, whether the cover reduces in line with a repayment loan or stays level, and the age and health of the director or key person whose life is covered.

Not sure which types apply to your business? Book a free discovery call with Executive Life and we'll map out the cover you could need.

How do the types of business life insurance compare?

The table below compares the five types by who owns the policy, who receives the payout and how premiums are typically treated for tax. Tax treatment depends on individual circumstances and current legislation, which can change.

Death in service has its own payroll and pensions tax rules, which we cover in death in service benefit: tax and HMRC rules. If you're weighing a group scheme against individual policies for your directors, the trade-offs are different again. For a side-by-side look at those two routes, see death in service vs relevant life insurance.

You may also come across the term corporate life insurance, which often means something different in the US. We explain the UK meaning, and why it matters, in corporate life insurance in the UK explained.

Personal vs company life insurance: what's the difference in cost?

Company life insurance could cost a director much less than a personal policy, because the premium comes out of pre-tax company profits rather than dividends that have already been taxed twice. The example below compares a £100 monthly premium for a higher-rate taxpayer in the 2026/27 tax year.

To fund a personal policy, your company first pays corporation tax at 25% on its profits. You then pay dividend tax at the 2026/27 higher rate of 35.75% on the dividend you take out to cover the premium.

If your company pays the 19% small profits rate, or you're a basic-rate taxpayer, the gap would be smaller. Our article on whether your limited company can pay for your life insurance explains how the company route works in practice.

Want to see the figures for your own business? Ask us for a personalised illustration.

Is business life insurance the same as business protection insurance?

Business protection insurance is the wider umbrella, and business life insurance sits inside it. It also covers what happens if you or a key person becomes seriously ill or can't work, through critical illness cover and income protection. The life-cover part is what pays out on death.

For directors, the income side is often handled by executive income protection. The company pays the premiums, and the policy can cover up to 80% of your salary and dividends combined if illness or injury stops you working, compared with typically 60% for a personal income protection policy.

Many business owners also hold whole of life cover personally as part of their inheritance tax planning. That sits alongside company-paid cover rather than replacing it.

How do you choose the right business life insurance policy?

The right business life insurance policy depends on what you're trying to protect: your family, your profits, your share of the business, your team or your debts. Use this list as a starting point, then talk it through with an adviser who can look at the whole picture.

• If you want to protect your family tax-efficiently → consider relevant life insurance.
• If one or two people drive your profits → consider key person insurance.
• If you share ownership with other people → consider shareholder protection with a cross-option agreement.
• If you want to look after your team → consider group life or death in service.
• If the business has loans, or you've signed personal guarantees → consider business loan protection.
• If you want cover for illness as well as death → consider executive income protection and critical illness cover.

Many directors need more than one type. Our comparison of life insurance options for company directors sets each route side by side.

How does Executive Life arrange your cover?

Executive Life is a whole-of-market, FCA-regulated broker that specialises in business protection and business life insurance for directors and business owners. Every recommendation is overseen by Alex Ogden DipFA, a named FCA-registered adviser, and arranging cover usually follows six steps.

1. Discovery call: a free conversation about your business, your family and what you want to protect.
2. Research: we compare cover from established UK protection insurers across the market.
3. Recommendation: a written recommendation explaining which policies suit your situation and why.
4. Underwriting: we handle the application and deal with the insurer on any medical or financial questions.
5. Trust set-up: we help put the right trust in place so the payout reaches the right people.
6. Annual review: we check your cover each year as your business, pay and family change.

We work with insurers including Aviva, Legal & General, Royal London, Vitality, LV=, Zurich, Scottish Widows and The Exeter, and you can read about each on our insurer pages. Our Google reviews come from directors and business owners we've helped.

Ready to talk? Book a free, no-obligation call with Executive Life.

Frequently asked questions

What is business life insurance?

Business life insurance is life cover that a limited company owns or pays for to protect its directors, owners, staff or the business itself. Depending on the type of policy, the payout may go to a director's family, to the business or to the other shareholders. The main types are relevant life insurance, key person insurance, shareholder protection, group life cover and business loan protection.

Can I put my life insurance through my business?

If you're a director or employee of a limited company, usually yes. The most common route is a relevant life policy, which the company owns and pays for, with the payout going to your family through a trust. Sole traders and partners can't use relevant life and normally need personal cover. Our guide on whether your limited company can pay for your life insurance explains the detail.

Is business life insurance tax deductible?

It depends on the type of policy. Relevant life premiums are typically an allowable business expense with no benefit-in-kind charge. Key person premiums may or may not be allowable, depending on the purpose of the cover. Company-paid shareholder protection usually creates a benefit-in-kind charge. Tax treatment depends on your circumstances and current legislation. Our guide to whether life insurance is a business expense covers each type.

What is the difference between business life insurance and personal life insurance?

The difference is who owns the policy, who pays for it and who benefits. A personal policy is paid for from income you've already been taxed on. Business cover is paid for by the company from pre-tax profits and, depending on the type, could be more tax-efficient. For a higher-rate taxpayer in 2026/27, a £100 monthly premium needs £207.52 of pre-tax company profit if paid personally, compared with £100.00 through relevant life.

How much does business life insurance cost?

The cost depends on the type of cover, the amount, your age, your health, whether you smoke and the policy term. As an illustration, a £100 monthly relevant life premium could cost the company £75.00 after 25% corporation tax relief. For staff schemes, see how much group life insurance costs.

Is business life insurance the same as business protection insurance?

Not quite. Business protection insurance is the wider term: as well as life cover, it includes critical illness cover and income protection, such as executive income protection for directors. Business life insurance is the part of business protection that pays out on death, whether to your family, your co-owners or the company itself.

Do I need business life insurance if I am the only director?

If you're the only director, key person and shareholder protection may matter less, but relevant life insurance could still be a tax-efficient way to protect your family. Your company pays the premiums, and the payout goes to your family through a trust rather than to the business. Our guide to life insurance for company directors compares your options.

This page is for general information only and does not constitute financial advice. Tax treatment depends on individual circumstances and current legislation, which may change. Always speak to a qualified adviser before making financial decisions.

About the author

Alex Ogden DipFA holds the Level 4 Diploma for Financial Advisers (DipFA) awarded by the Walbrook Institute London, formerly known as the London Institute of Banking & Finance (LIBF). He is authorised by the FCA, Ref: AJO01072. View Alex on the FCA register.

Tax rates and thresholds are subject to change. This article will be updated following each HMRC Autumn Budget or Spring Statement where relevant thresholds change.
Last reviewed: October 2026 — Next review: April 2027 | 15 min read