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Protection for Company Directors
A healthy business doesn't mean you're personally covered. Here's how to protect your family, your income and the company.
It's an easy assumption to make: the business is doing well, so surely you're covered. In reality, personal protection is just as relevant for a limited company director as for anyone else self-employed, and it's easy to let it slide while you're focused on running the business.
Personal protection directors often overlook
A Relevant Life Plan can be a tax-efficient way to arrange life cover as a director, since premiums are typically paid by the company and treated as a business expense rather than coming out of your personal income. The exact benefit depends on your circumstances, so it's worth talking through properly rather than assuming it's automatically the right structure.
Income protection for directors needs to reflect how you're actually paid, usually based on an average of recent years' salary and dividends rather than a flat monthly figure, particularly where dividend income varies year to year. We'll help evidence this properly so your cover level is accurate.
Critical illness cover pays a tax-free lump sum on diagnosis of a specified serious condition. For a director this can matter twice over, protecting your personal finances and giving the business breathing room while you're unable to work.
Business protection, a distinct but related need
Shareholder protection is a business arrangement, not a personal one. It funds a buy-back of your shares if you die or become critically ill, protecting the business and your co-directors' interests. It's easy to conflate this with personal life cover, but most directors genuinely need both, because they protect different things.
Business protection is broader than shareholder protection alone. Key person insurance covers the financial impact on the business if a critical director or income-generator dies or becomes critically ill, separate again from cover protecting your own family's finances. Whether you need it depends on your company structure and how dependent the business is on specific individuals.
Why directors choose TLD
- Personal and business protection covered in one conversation
- Independent advice, not tied to any one insurer
- 12,800+ plans arranged and £1.07bn+ in cover placed since 2015
- Named Stockport's Three Best Rated Insurance Services, 2022 to 2026
- Your first consultation is free, with no obligation
Buying or refinancing as a director?
Lenders vary widely in how they treat salary, dividends and retained profit, and the wrong one can mean being offered far less than you can actually afford.
Frequently Asked Questions
What is a Relevant Life Plan and could it save me tax?
A Relevant Life Plan is a type of death-in-service life cover that a limited company can arrange for a director, with premiums usually paid by the company as a business expense rather than from your personal income. This can be more tax-efficient than a personal policy, though the exact benefit depends on your circumstances, so we'll talk it through in detail before recommending it.
Do I need personal life cover if I have shareholder protection?
Usually yes, because these cover different things. Shareholder protection is a business arrangement that funds a buy-back of your shares if you die or become critically ill, protecting the business and your co-directors. Personal life cover protects your family's income and financial commitments, and most directors need both.
How does income protection work if my income varies year to year?
Income protection for directors is typically based on an average of recent years' income, salary plus dividends, reflecting how you're actually paid rather than assuming a flat salary. We'll help evidence this properly so your cover level is accurate.
Should I consider critical illness cover as well as life cover?
Many directors find it worth having both. Life cover protects your family if you die. Critical illness cover pays a lump sum while you're still alive, on diagnosis of a specified serious condition, which is useful for clearing debts, funding treatment, or easing pressure on the business while you're unable to work.
What is business protection and do I need it as a director?
Business protection is a broader category covering shareholder or partnership protection, which funds a share buy-back if a co-director dies or is critically ill, and key person insurance, which protects the business against the financial impact of losing a critical director or income-generator. Whether you need it depends on your company structure and how dependent the business is on specific individuals.
Can my company pay the premiums?
For a Relevant Life Plan and most business protection policies, yes, that's part of their structure. For standard personal life cover or income protection this isn't usually possible without other tax implications, so it's important to use the right product type for what you're trying to achieve.
What happens to my cover if I stop trading or sell the company?
This depends on the specific policy. A Relevant Life Plan or business protection policy is tied to your company, so it would typically need reviewing if that changes. Personal cover isn't affected by your company status, and we'll make sure you understand this distinction before choosing.