What is Executive Income Protection Insurance?
Executive income protection insurance is a specialised form of coverage designed to provide financial support if a director or high-earning employee is unable to work due to illness or injury. Income protection insurance is paid for by the employer and helps to fund any sick pay to the employee, This ensures that the person affected continues to receive a portion of their salary, safeguarding their financial stability and the financial health of the business.
As well as the cost of sick leave, the policy may also cover employer pension and National Insurance contributions, along with dividends and P11D benefits.
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Why Choose Go Protect Me?
Go Protect Me have years of experience working with small and medium-sized companies to find them the best executive income protection insurance. Here are some of the reasons to use us.
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Why should businesses buy income protection insurance?
Financial security for you and your employees
Directors and high-earning executives in SMEs often have large financial commitments. If they are sick or injured it can be difficult to meet these commitments. Purchasing executive income protection through your company guarantees that they receive a proportion of their salary each month, relieving the strain ion their finances.
Executive income protection also reduces the strain on your business, as it covers a significant proportion of the amount you would need to pay out from your company in employee sick pay. Income protection premiums are generally a tax-deductible business expense, so are an efficient way to safeguard your business.
Attract and retain talent
When your company has executive income protection insurance it allows you to confidently offer employees support if they become sick or have an accident. Employee benefits such as this show that you are committed to their well-being and makes your business an appealing place to work.
Business continuity
Losing a director or key executive to accident or sickness can have a significant impact on a small or medium-sized business. Executive income protection insurance can be used to help cover the costs of temporary staff or resources, helping to ensure that the business can continue to run smoothly.
The cost of income protection insurance for key employees
Although executive income protection is taken out and paid for by the employer, the level of monthly premiums paid is largely determined by factors relating to the named employee or employees that the policy covers. These factors include:-
Health status
Directors or key personnel’s current and past health will affect the level of premiums. Where the employees are in good health with no history of poor health premiums will be lower than for employees with pre-existing medical conditions.
Age
Insurers will look at the age of employees at the time the policy is taken out. Premiums for policies that cover younger directors or executives will not be as high as those for policies for older employees.
Seniority
The more senior a director or executive the higher their salary will be and consequently the higher the benefit paid will be. This higher level of cover will result in higher premiums.
Job role
Where an executive or director is in a role associated with a higher level risk premiums may also be higher. Insurers may consider roles with high stress level to increase risk of illness.
Length of benefit period
When employers take out an executive income protection they will be offered a choice regarding how long the cover will last for. Short-term cover usually lasts no longer than 2 years, while long-term cover pays a monthly benefit for as long as the employee is unable to work, or until they retire.
Waiting period
Choosing to wait longer before monthly payments are made can reduce the cost of your key person income protection policy. This deferred period can be as little as a week and as long as weeks.
SMEs who are thinking about taking out executive income protection insurance should consider balancing the amount of cover they require with the level of premiums they can afford. Go Protect Me brokers can ensure that you choose the most comprehensive cover for your budget.
We consider all aspects of choosing an executive income protection plan, including executive income protection tax treatment.
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Customised solutions for your business
Finding the best executive income protection insurance for every type of SME is what Go Protect Me’s brokers do every day of the week. We understand that every business is different and so their key person insurance requirements differ. Our team also knows how important your directors and key executives are and how much you want to protect them in the event of sickness or injury. We take all your requirements into account when we compare executive income protection plans.
Contacting Go Protect Me is the first step in ensuring that your business looks after both your key employees and your future financial stability.
Extra value for your business
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