Executive Income Protection offers businesses a way to secure income for directors and key employees if they’re unable to work due to illness or injury. Unlike personal income protection, this policy is paid by the business, with premiums considered a company expense.
In the event of a claim, the benefit is paid to the company, which then pays the employee’s salary through PAYE. Smart Financial can help businesses find the right Executive Income
Protection solution to safeguard both the company’s financial stability and the director’s income.
Executive Income Protection is designed for companies rather than individuals. Here’s how it differs:
Scenario: Mary is the Managing Director of a small tech firm, earning €100,000 annually. Her company takes out an Executive Income Protection policy with a 13-week deferred period to cover 75% of her income if she becomes unable to work.
Six months later, Mary suffers a severe illness, requiring a year of recovery. After the deferred period, the policy pays the company €6,250 per month to cover Mary’s salary, which the business then pays her through PAYE.
Scenario: John, a finance director earning €80,000 annually, is a critical asset to his company’s operations. The company arranges an Executive Income Protection policy for him with an 8-week deferred period and 75% coverage.
John is injured in an accident, requiring six months off work. After 8 weeks, the policy provides the company with €5,000 per month, allowing them to pay John’s salary through PAYE without straining cash flow.
Premiums are based on several factors, including:
For example, a 45-year-old director in a lower-risk industry might pay €80 to €100 per month for a 75% coverage policy with a 13-week deferred period.
Executive Income Protection premiums are typically tax-deductible business expenses. This provides the company with a cost-effective way to protect its employees while reducing overall tax liability.
At Smart Financial, we help you explore Executive Income Protection options that best meet your needs and maximise both employee security and business benefits. This tailored support ensures you can protect your most valuable employees with a solution that fits your company’s budget and structure.
Personal income protection is a crucial financial safeguard for self-employed individuals or employees without workplace coverage. This policy ensures a steady income if illness, injury, or mental health issues prevent you from working.
Get help from Smart Financial knowledgeable Income Protection advisers to discover coverage that meets your requirements.
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It’s a business-paid policy that provides income protection to company directors and key employees, with the company paying premiums on their behalf.
Company directors, key employees, and anyone whose absence would financially impact the business can benefit.
In the event of a claim, payments go directly to the company, which then pays the director or employee through PAYE.
Yes, premiums are usually tax-deductible, making this a cost-effective option for businesses.
Deferred periods typically range from 4 to 52 weeks, with shorter periods resulting in higher premiums.
Most policies cover up to 75% of the employee’s income, helping to maintain their financial stability during recovery.
It ensures the director or key employee’s income, reduces financial strain on the company, and maintains employee morale.
