Can a limited liability partnership (LLP) take out keyman insurance?

We are an established partnership and are wondering whether given our set-up we can take out key person insurance for partners and employees?

Question asked by Peter Williams
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Answered by Tom Conner

Given it has it’s own legal entity, a limited liability partnership (LLP) can take out policies such as key person life insurance and critical illness cover on the life of a key person or member in the same way a limited company can.

What is an LLP company?

There are two distinct risks in this scenario: the partners and the employees. A Limited Liability Partnership (LLP) is effectively halfway between a limited company and a partnership.

With an LLP while the taxation of the individual partners is similar to a traditional partnership, the liability is limited to the amount they have subscribed to the partnership.

Very similar to a limited company, a limited liability partnership has its own persona and can contract in its own name.

It is important to recognise that this is not the case with a standard partnership in the UK because such a partnership does not have a separate legal entity.

So while an LLP is free to enter into a Key Man Insurance contract, a partnership cannot enter into a contract in the same way. This means you must take a different approach for both partners and employees.

limited liability partnership
 
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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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