The only time this can be done is where the client is a sole trader. In all other cases the 2 needs should be addressed separately.
This is because it is essential that business protection arrangements are established on a purely commercial basis. This will make sure that there are no problems with inheritance tax being charged unexpectedly. To keep an arrangement on a commercial basis only those who actually own shares in the business should be able to benefit from the arrangement. You should not therefore include a shareholder’s or partner's spouse or children as beneficiaries under any trust arrangement unless they also own a share of the business as this would prevent the arrangement from being purely commercial.
If the arrangement is not commercial it could be argued by HMRC that a gift with reservation by associated operations has been established. That is because each partner/shareholder is taking out a plan and putting this in trust for the benefit of the others in return for them doing the same thing. This is an associated operation and so if there is an element of gift (i.e. someone who is not themselves taking out a similar plan being able to benefit), a gift with reservation will arise. This would mean if the partner/shareholder died HMRC would treat the policy proceeds as part of their estate for inheritance tax. It is therefore advisable to keep personal protection arrangements separate from business protection arrangements.
However for a sole trader they are the business and there are no other owners. Their protection plan would therefore simply be placed under a normal split trust for their family. The family then have the funds available to them outside of the business to maintain their lifestyle. It is therefore possible to combine cover for both personal and business reasons in these circumstances.