What is Executive Income Protection?
Executive Income Protection is a policy to protect both the Business and its’ employees. The policy is designed to pay the business if the employee is unable to work due to Incapacity (ill health). Your company will then pay the employee, after any deductions, meaning the employee can continue to pay their bills and essential expenditure until they are well enough to return to work.
How does Executive Income Protection benefit the Business?
- The monthly benefit is used to fund sick pay benefits. This means that the sick pay doesn’t need to be taken from any capital reserves.
- Depending on who the policy is for, the premiums may be classed as tax-deductible.
- By offering this cover as a company benefit, your employee can focus on their recovery not any potential money worries, meaning they could return to work sooner.
How does Executive Income Protection benefit the Employee?
- The employee doesn’t need to rely on their savings or state benefits to meet their financial commitments, instead they can use the monthly benefit they receive.
- The premiums are not classed as a P11D benefit.
- Pension and National Insurance contributions can also be protected, the idea being that an illness will not impact on the employee's retirement plans.
What else do I need to know?
- The premium is paid for by the Business, not the employee.
- Normally, an employee can be covered up to a maximum of 80% of their earnings. Pension and National Insurance contributions can be covered in addition to this.
- All employees and company directors are eligible providing they are registered under PAYE.
- There is a range of deferred periods available meaning you can tailor how quickly the benefit would be paid in a claim.