In this article
Key points
- The death of a key person can weaken a company’s operations, finances and governance for a long time.
- Business life insurance pays capital to the company, which is both policyholder and beneficiary.
- This liquidity funds continuity: succession, loan guarantees, buyback of shares, replacement.
- Premiums are generally deductible; the benefit paid out is normally taxable as profit.
A company’s success often depends on a few key people: owners, partners or strategic employees.
With their experience, know-how, resources and network, these people are genuine strategic assets. Their sudden loss can have serious economic and organisational consequences: protecting the company financially against this risk is therefore an essential part of risk management.
Why take out business life insurance?
The purpose of death cover in favour of the company is to minimise the economic impact of the death of a key person. The capital paid out by the policy makes it possible to:
- keep the business running;
- provide the financial stability needed to get through the crisis;
- in the most critical cases, secure the company’s very survival.
The most common uses: succession planning, covering guarantees for loans and financing, buying back shares between partners, finding a replacement, and consulting or reorganisation costs.
Three real-life scenarios
- The death of a financing partner: their loss can complicate the management of loans or the availability of liquidity.
- The loss of a strategic employee: an experienced manager close to key clients or suppliers leaves a gap that weighs on turnover and is costly to fill.
- The death of a partner: who inherits their shares? Without planning, new people may enter the decision-making chain and put governance at risk.
In each of these cases, the risk is real: financial imbalance, loss of trust among clients and suppliers, and a domino effect across the whole organisation.
The right policy provides the resources needed to face the future with confidence.
Maurizio Reichlin, Assidu
How business life insurance works
It is a policy taken out on the life of a natural person:
- The company takes out the contract: it is both policyholder and beneficiary.
- If the insured person dies, the company receives the agreed capital directly.
- The liquidity obtained immediately meets the needs created by the event.
Financial and tax basis
To be effective, the policy must be based on a precise identification of the risk, a careful analysis of the company’s financial needs and an exact calculation of the sum to be insured.
Tax treatment in general
Table 1| Stage | Tax treatment |
|---|---|
| During the contract | Not taxable, provided there is no surrender value |
| Premiums | Generally deductible as expenses |
| Benefit paid out | Normally treated as taxable profit of the company |
Our support
Assidu’s specialists analyse your financial needs with you, identify the critical factors and define what the cover should be used for. They also help you with the sensitive tax questions involved.
As a broker, we select the most suitable insurer for you, to build a policy that meets your needs precisely.
Insurance and Pension Consultant · Individual Pension Coordinator · Insurance Specialist with Federal Diploma of Higher Education
