In a business Partnership, one of the greatest risks is that one of the partners dies and his/her share of the business passing to someone else outside of the partnership. Partnership assurance provides a safety net to ensure that surviving partners have sufficient funds to buy out the interests in the business, or provide suitable compensation to the deceased spouse and or dependents.

Key person insurance, also formerly called key man insurance, is an important form of business insurance. There is no legal definition for ‘key person insurance’. In general, it can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the person specified in the policy.

In the interests of financial security, business stability, and continuity – particularly for private limited companies where there may only be a small number of principal shareholders – it is essential to provide a safety net following the loss of a shareholder.