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Corporate Protection

If personal protection is about looking after your family, corporate protection is about looking after your business, your employees, and your fellow shareholders. Businesses are made of people. When those people can’t work, die, or become seriously ill, the financial impact on the business can be catastrophic.

Corporate protection splits into three areas: Group Risk (insuring your workforce), Group Medical (keeping your workforce healthy), and Business Protection (protecting the business itself).

Group Risk

Group risk products are insurance policies taken out by employers for their employees. The employer pays the premiums as a business expense, and the cover applies to the workforce as a whole. Because risk is pooled across many employees, group rates are significantly cheaper per person than individual policies.

Group Life Assurance (GLA) / Death in Service

The most common employee benefit after the pension. If an employee dies while employed by the company, GLA pays a tax-free lump sum to their nominated beneficiaries.

How It Works

  • Cover is expressed as a multiple of salary: 1x, 2x, 3x, 4x, or higher
  • A typical scheme offers 3-4x salary for all employees
  • Some schemes offer different multiples for different levels (e.g. 6x for directors, 3x for all other staff)
  • Premiums are paid by the employer and are a deductible business expense for corporation tax
  • The benefit is tax-free to the employee’s family (paid from a discretionary trust, so outside the estate for IHT)

Free Cover Limit (FCL)

The FCL is the maximum amount of cover any individual can receive without medical underwriting. The insurer sets it based on the scheme size, demographics, and industry. Employees with cover below the FCL are automatically accepted. Those above it may need to answer health questions or undergo medical screening.

For a typical scheme of 50 employees at 4x salary, the FCL might be 500,000-1,000,000. Only employees with salaries pushing their cover above that need individual underwriting.

Expression of Wish Forms

Employees should complete an expression of wish form nominating who they’d like the benefit paid to. This is NOT legally binding (the trustees make the final decision), but trustees almost always follow the nomination.

Keep it updated. After marriage, divorce, having children, or bereavement, update the form. Outdated nominations cause real problems and real family disputes.

The LSDBA Consideration

Since April 2024, pension-related death benefits (including death in service paid from a registered pension scheme) count towards the Lump Sum and Death Benefit Allowance (LSDBA) of 1,073,100. For employees with large pension pots AND generous death in service multiples, the combined benefits could exceed this threshold, triggering a tax charge.

Note: from April 2027, most unused pension funds and death benefits will also be subject to IHT, which adds another layer of planning.

Key Providers

Legal & General, Aviva, Canada Life, MetLife, Unum, and Zurich are the main GLA providers. Legal & General and Canada Life dominate the market by scheme numbers.

Group Income Protection (GIP)

GIP provides employees with a replacement income if they’re unable to work due to long-term illness or injury. It’s the corporate equivalent of personal income protection.

How It Works

  • Benefit level: typically 50-75% of salary (some schemes include employer pension contributions and NI on top)
  • Deferred period: usually 13 or 26 weeks (aligned with the employer’s sick pay policy)
  • Payment term: limited (2 years, 5 years) or unlimited (pays until recovery, death, or scheme retirement age)
  • Premiums are paid by the employer as a deductible business expense
  • Benefits paid to the employee are taxed as earnings (unlike personal IP which is tax-free). The employer continues to pay the employee through payroll

Early Intervention and Rehabilitation

Modern GIP is about much more than just paying claims. Providers like Unum, Canada Life, and Legal & General offer early intervention services designed to help employees return to work sooner:

  • Employee Assistance Programmes (EAPs): 24/7 confidential helplines for mental health, financial, and legal issues
  • Vocational rehabilitation: occupational therapists working with the employee and employer to facilitate a return to work
  • Mental health support: counselling, cognitive behavioural therapy (CBT), online support tools
  • Physiotherapy and musculoskeletal services: fast-track access to treatment for back pain, joint problems, etc.

The rehabilitation aspect can be more valuable than the financial benefit itself. Getting someone back to work sooner is better for the employee, the employer, and the insurer. Everyone wins.

GIP vs Statutory Sick Pay

Without GIP, employees who exhaust their employer’s sick pay are left with Statutory Sick Pay (SSP) of 118.75 per week (2026/27) for up to 28 weeks. After that, nothing. GIP fills this gap and keeps the employee on payroll for far longer.

Key Providers

Unum, Canada Life, Legal & General, Aviva, and Zurich. Unum has historically been the market leader in GIP and is particularly strong on rehabilitation services.

Group Medical

Group medical benefits keep employees healthy, productive, and loyal. They range from comprehensive private medical insurance to simple cash plans, with newer digital-first options in between.

Corporate PMI (Private Medical Insurance)

Company-funded private medical insurance for employees. The same product as individual PMI but at group rates, which are significantly cheaper.

How It Works

  • The employer takes out a policy covering all (or some) employees
  • Cover includes consultations, diagnostics, surgery, and treatment at private hospitals
  • Increasingly includes mental health treatment, virtual GP services, and wellness programmes
  • Can be extended to cover spouses and dependants (often employee-funded through flexible benefits)
  • Premiums are a deductible business expense for the employer
  • The employee pays benefit in kind (BIK) tax on the value of the cover (it’s treated as a taxable perk through the P11D)

Employer NI on PMI

Employers also pay Class 1A NI at 15% (2026/27) on the BIK value of the PMI benefit. This is an additional cost on top of the premium.

Flexible Benefits Schemes

Many larger employers offer PMI through a flexible benefits (flex) scheme, where employees choose from a menu of benefits. Some employers pay for basic cover and let employees buy up (add dependants, reduce excess, etc.) through salary sacrifice or payroll deductions.

Key Providers

Bupa, Aviva, AXA Health, Vitality, and WPA dominate the corporate PMI market. Bupa is the largest private health insurer in the UK.

Health Cash Plans

The entry-level employee health benefit. Cash plans reimburse everyday health costs up to set annual limits. They don’t replace PMI for serious illness, but they’re cheap, popular, and genuinely useful for routine healthcare.

What’s Covered (Typical)

  • Dental: check-ups, hygiene, treatment (limits vary, often 100-250 per year)
  • Optical: eye tests, glasses, contact lenses (50-200 per year)
  • Physiotherapy: (150-500 per year)
  • Consultation fees: specialist consultations (100-300 per year)
  • Alternative therapies: osteopathy, chiropractic, acupuncture (in some plans)
  • Health screenings and wellbeing support

Why Employers Like Them

  • Cheap: typically 5-20 per employee per month
  • Broad appeal: everyone uses the dentist and optician
  • Retention tool: a visible, tangible benefit
  • Can be employer-paid or voluntary (employee-funded)

Key Providers

Medicash, Westfield Health, BHSF, Simplyhealth, and Health Shield.

Healthcare Membership

A newer model sitting between cash plans and full PMI. Healthcare memberships provide access to private healthcare services through a subscription model rather than traditional insurance.

What’s Typically Included

  • Digital GP access (24/7 video consultations)
  • Mental health support (counselling, CBT, therapy apps)
  • Employee Assistance Programmes (EAPs)
  • Health screenings and assessments
  • Wellness programmes (gym discounts, nutrition advice, mindfulness)
  • Physiotherapy (virtual or in-person)

Who Offers This

Vitality, Bupa (Bupa Health Clinics), Nuffield Health, and newer digital-first providers like Peppy, Unmind, and Koa Health. Many employers combine a healthcare membership with a cash plan to provide broader coverage without the cost of full PMI.

Business Protection

Business protection is about insuring the business itself against the loss of key people, and ensuring that ownership passes properly if something happens to an owner.

Key Person Insurance

What happens if your best salesperson, your lead developer, or your founder gets hit by a bus tomorrow? Key person insurance answers that question with money.

How It Works

  • The business owns the policy, pays the premiums, and receives the payout
  • Cover can be for death, critical illness, or both
  • The payout gives the business a financial cushion to: recruit a replacement, cover lost revenue during transition, repay business loans (lenders often require key person cover), and reassure clients and suppliers

Calculating Cover

Three approaches:

  • Multiple of salary: typically 5-10x salary plus recruitment costs
  • Contribution to profit: the person’s estimated contribution to business profits over a replacement period (usually 2-5 years)
  • Cost of replacement: recruitment fees, training, lost productivity, and revenue impact during transition

Tax Treatment (2026/27)

If the policy protects against loss of profits:

  • Premiums are usually an allowable revenue expense for corporation tax
  • The payout is taxable as a trading receipt

If the policy is to repay a loan:

  • Premiums are generally NOT tax-deductible
  • The payout is not taxable (it’s repaying capital, not generating income)

Always take advice on the tax treatment. HMRC’s view depends on the specific purpose of the policy.

Shareholder Protection

If a business owner dies, what happens to their shares? Without proper planning, the shares pass through the estate to the deceased’s family. The family may not want to (or be able to) run the business. The remaining shareholders may not want to work with the deceased’s spouse or children. Everyone’s stuck.

Sharehold protection solves this.

How It Works

Each shareholder takes out a life insurance policy (and often critical illness cover) on their own life. The policies are written in trust, typically using a cross-option agreement:

  • The remaining shareholders have the option (not obligation) to buy the deceased’s shares
  • The deceased’s estate has the option (not obligation) to sell
  • The insurance payout provides the funds to complete the purchase

Why Cross-Option, Not Buy-Sell?

A buy-sell agreement creates a binding obligation to buy and sell. HMRC has historically argued that binding agreements can prevent shares from qualifying for Business Relief (100% IHT relief on qualifying business shares). A cross-option agreement preserves Business Relief because neither party is obligated.

This is a technical but critical distinction. Get it wrong and the deceased’s shares could face a 40% IHT bill that proper planning would have avoided.

Calculating Cover

Cover should equal the value of each shareholder’s stake. This requires a professional valuation and should be reviewed regularly as the business grows.

Partnership Protection

The same concept as shareholder protection but for partnerships (including LLPs). If a partner dies or suffers critical illness, the remaining partners need funds to buy out the deceased’s share, and the family needs fair value.

Structured the same way: individual policies on each partner’s life, written in trust, with a cross-option agreement. Without it, the partnership may need to be dissolved, assets sold, and the business wound up to pay the outgoing partner’s estate.

Relevant Life Plan (RLP)

A Relevant Life Plan is one of the most tax-efficient ways for a business to provide life cover for an individual employee. It’s essentially a death-in-service benefit arranged on a one-to-one basis.

How It Works

  • The employer takes out and pays for a life insurance policy for a specific employee
  • The policy is written in trust from day one
  • If the employee dies, the trust pays a lump sum to the nominated beneficiaries

Tax Advantages (2026/27)

  • Corporation tax deductible for the employer (premiums treated as a business expense)
  • No P11D benefit for the employee (no income tax on the premiums)
  • No employer NI (at 15%) or employee NI on the premiums
  • Payout is IHT-free (held in trust, outside the estate)
  • No impact on pension annual allowance or LSDBA

Compare this to paying the same amount as additional salary: the employee would pay income tax (up to 45%) and NI (8%), and the employer would pay 15% employer NI. The RLP route is dramatically more tax-efficient.

Who It’s For

  • Company directors (especially those who are the sole employee)
  • Higher earners who would benefit most from the NI and income tax savings
  • Small companies too small for a group life scheme (which typically needs 3+ employees)
  • Employees who want cover above the group life scheme limit

Key Providers

Royal London, Legal & General, Aviva, and Zurich all offer Relevant Life Plans. Royal London is particularly well-established in this space.

Executive Income Protection

The corporate version of personal income protection, specifically designed for company directors and senior executives. The company takes out and pays for the policy as a business expense.

How It Differs from Personal IP

  • Company-paid: premiums are a business expense (corporation tax deductible)
  • Broader benefit definition: can cover salary, bonus, profit share, pension contributions, and other benefits
  • Individually underwritten: tailored to the specific executive rather than a group scheme
  • Higher benefit limits: for directors earning above typical GIP scheme limits
  • Own occupation definition usually available (important for specialists)

Tax Treatment

  • Premiums are a deductible business expense
  • Benefits paid to the employee are taxed as earnings (same as GIP)
  • The employer pays the benefit through payroll and deducts PAYE and NI

Who It’s For

Owner-directors of limited companies who are the primary income generator for both themselves and the business. If the director can’t work, the business may not generate revenue, and the director has no income. Executive IP covers both angles.

The Bottom Line

Corporate protection is about recognising that a business is only as resilient as its people. Group risk benefits attract and retain staff. Group medical keeps them healthy and productive. Business protection ensures the business survives the loss of an owner or key person.

Every business with employees should have group life and income protection at a minimum. Every business with multiple owners should have shareholder or partnership protection. Every company director should know about Relevant Life Plans.

The premiums are a business expense. The tax treatment is favourable. And the alternative (being unprotected when something goes wrong) is always more expensive than the insurance.