Executive Income Protection is one of those products that insurance companies will often look at without fully understanding, often leaving it by the wayside as a business cost that you may not want to incur. However, there are a few reasons your company could benefit from adopting Executive Income Protection. Read on to find out about how Executive Income Protection can help your company remain financially stable and look after your employees when they might be struggling.
What is Executive Income Protection?
Like a Personal Income Protection plan an Executive Income Protection policy is designed to pay out a monthly sum of money in the event that you can’t work for any medical reason. Whether it’s a serious injury that stops you from working or an ongoing chronic illness, you’ll be protected from your inability to work by the policy.
The fundamental difference between Executive Income Protection and personal income protection is the person that pays for the scheme. In the case of Executive Income Protection, it’s the company that pays for the insurance policy. This means that you can typically expect to receive up to 80% cover on your annual income. Although you might still need to pay taxes on this income, it means that you can at least have something to rely on whilst you complete your recovery.
Is it worth it from a business perspective?
Executive Income Protection is by far one of the most important insurance policies you can engage with as a business owner.
One of the first things that you need to consider is the fact that when an employee is off work, they won’t be able to work productively for you. An Executive Income Protection plan effectively helps you cover the sick pay costs for your employees. This insurance can pay for their time off, leaving you in the best possible financial position.
Most employers do not offer sick pay to employees beyond the Statutory Sick pay levels. Having an Executive Income Protection policy can thereby be viewed as a significant advantage when it comes to hiring as you are able to provide great benefits to your employees. All while the monthly premiums paid through the business, save you tax.
What does Executive Income Protection cover?
In addition to simply covering the wages of your employees, Executive Income Protection guards your employee against the loss of all forms of income from your company. These include but are not limited to:
- Dividends from shares owned in the company
- Commission from expected sales that would be lost
- Bonus payments they would typically receive
- Pension contributions
- Overtime payment that would typically be received
The policy can also cover up to 80% of spouse or registered civil partner’s gross earnings and or dividends which would stop if the employee was unable go to work.
All that you need to do to ensure that these payments are also received is to prove that your employee would typically receive this income. After all, an insurance provider isn’t going to want to support someone’s income that didn’t initially exist before the claim was put in.
What if things get more serious?
In case your employees find themselves struggling with a much more dangerous condition, you should always look to get as many employees as possible covered by relevant life cover. It can be quite morbid to consider these things, but part of the reality of running a business is that disasters can happen. Preparing for them is the first step to being able to handle them in the best way for both your employees and your business.
Set up Executive Income Protection
If you’re interested in Executive Income Protection to help your company in the case of an employee being unable to work, contact us below! We can help to find you the most appropriate insurance policies for your business.
