Protect Your Business with Executive Income Protection
Executive Income Protection safeguards a company director's earnings if they are unable to work due to illness or injury, ensuring financial stability for both the individual and the business.
What is Executive Income Protection?
Description
This insurance policy provides a monthly benefit to the business if a key employee or director becomes ill or injured and cannot work.
Function
The policy ensures that the business can continue to pay the affected individual, covering up to 80% of their earnings, including dividends and P11D benefits.
Benefits
Protects the business finances, maintains employee income, and can include pension and National Insurance contributions without incurring P11D benefit in kind tax.
Why is Executive Income Protection Important?
Financial Stability
Ensures that the business can manage financial obligations and maintain operations even if a key individual is unable to work.
Employee Assurance
Provides the affected individual with a steady income, helping them meet their financial commitments without relying solely on savings or state benefits.
Tax Efficiency
Often more tax-efficient for the employee compared to personal income protection cover.
Key Features of Executive Income Protection
Provides a monthly benefit to the employer to fund the employee's ongoing sick pay via PAYE.
Can cover up to 80% of the employee’s earnings, plus employer's National Insurance and pension contributions.
Designed for small and medium businesses.
Usually counts as a tax-deductible expense for the employer.
Setting Up Executive Income Protection
Consultation
Consult with a Business Protection specialist to tailor the coverage to your business’s specific needs.
Documentation
Provide necessary documents based on your business structure, such as Limited Company, LLP, partnership, or sole trader.
Policy Arrangement
Establish a policy where the employer (policy owner) arranges and pays for coverage on the life of the employee (person insured). In case of a valid claim, the employer receives the monthly benefit and passes it on to the employee through PAYE to fund their sick pay.