We are an established partnership and are wondering whether given our set-up we can take out key person insurance for partners and employees?
Given it has its 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.
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.
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I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.