A partnership is defined in the Partnership Act 1980 as "the relation that exists between persons carrying on a business in common with a view to profit".

On the death of a partner, the beneficiaries may wish to withdraw his share of the partnership's value, which can cause serious problems for the remaining partners. In many cases, goodwill forms a part of the partnership and the assets may have to be sold to pay the value of the partner's share to his family.

In order to prevent selling the business, there is the need for partnerships to insure against the death of each individual partner - to allow the purchasing of their share of the business if they die.

In small businesses (often private limited companies), who have a small number of shareholders who are likely to be family or friends, the remaining shareholders may want to purchase the deceased's share to ensure the business continues in the expected manner.