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

Question

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

Answer 1

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. Given it has it's own legal entity the 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.

It is important to recognise that the  this is not the case with a standard partnership in the UK as such a partnership does not have a seperate legal entity. A partneship cannot enter into a contract in the same way as an LLP or limited company which means we must take a different approach for both partners and employees.

This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 020 8432 7333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.