We are an established limited liability partnership. We’re wondering whether given our set up we can take out Key Person Insurance?
Very similar to a limited company, an LLP has its own persona and can contract in its own name.
As such, given that it has its own legal entity, the answer is yes. Limited liability partnerships (LLPs) can take out policies such as Key Person Insurance on the life of a key person or member in the same way limited companies can.
Many LLPs take out Keyman Insurance to secure a lump sum payout that helps maintain business continuity at a difficult time, such as the loss of a key person through death or critical illness.
For example, this might involve paying a replacement key person or simply mitigating loss of profits the key person’s absence causes.
Can a Standard Partnership Take Out Keyman Insurance?
However, while a Limited Liability Partnership can take out Keyman Insurance, it is important to know that this isn’t the case with a standard UK partnership setup. This is because such partnerships don’t have a separate legal entity.
So while an LLP is free to purchase Key Man Insurance, a standard partnership can’t.