Executive Income Protection for Company Directors

Why Company Directors in Ireland Need Executive Income Protection


As a company director in Ireland, you shoulder immense responsibility. You steer the ship, make crucial decisions, and ensure your business thrives. But what happens if illness or injury strikes, leaving you or one of your key employees unable to work?


How long could you pay them for? A week, a month, a year, indefinitely? Most companies could not afford to pay a staff member indefinitely.

This is where Executive Income Protection (EIP) steps in, acting as a vital safety net for both you and your business.


What is Executive Income Protection?


Executive Income Protection is a tailored insurance policy designed specifically for company directors and high-level employees. In the event of a serious illness, disability, or accident that prevents you from working, EIP provides a regular income replacement. This ensures financial stability for you and your family while also minimizing disruption to your business.


An Executive Income Protection plan covers up to 75% of your earnings (less any social welfare payments) in the event of an unforeseen illness or injury in your business, up to a maximum of €262,500.


This plan works similarly to an ordinary income protection policy offering a replacement income, only difference being, the executive income protection is taken out and paid for by the business on behalf of the Director or employee. In the event of a claim, the benefit is paid directly to the company who continues to pay the employee or director through PAYE whilst they are unable to work.



Why is Executive Income Protection Important for Irish Company Directors?


Income Security:

Traditional social welfare payments might not cover your entire salary. EIP ensures you receive a significant portion of your income (typically up to 75%), allowing you to focus on recovery without financial worries.


Business Continuity:

A director’s absence can be detrimental to a company’s operations. EIP helps maintain business continuity by covering your income, allowing someone else to step in without financial strain on the company.


Tax Advantages:

EIP premiums are considered a legitimate business expense, attracting tax relief for the company. This reduces the overall cost of the policy for both the director and the business.


Peace of mind:

Knowing you and your family are financially protected in case of the unexpected brings immense peace of mind. This allows you to focus on running your business with confidence and clarity.


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Beyond Financial Protection:


EIP goes beyond just income replacement. Some policies offer additional benefits, such as:


Serious Illness Cover:

Provides a lump sum payment if you are diagnosed with a serious illness.


Hospital Cash Benefit:

Offers additional financial support during hospitalization.


Protect your Pension Contributions: 

This additional benefit can be added to the plan which will mean that the employer can pay towards the life insured’s approved pension scheme if you are unable to work due to illness or injury during the term of the plan and have suffered a loss of earnings as a consequence. You can protect up to 33% of salary to a maximum of €50,000 to ensure that pension contributions can be maintained.


Continuation Option:

This automatic benefit means that if you as the life assured leaves service within the term of the plan you will have the option to continue the policy in your own name without any medical underwriting within 60 days of leaving service. The new plan will be issued at the prevailing rates at the time of its issue and is subject to the terms and conditions in the plan.



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Considering EIP in Ireland:


Here are some key factors to consider when choosing an EIP policy in Ireland:


Level of Cover: Determine the income replacement percentage that suits your needs.

Benefit Period: Choose a policy that provides income replacement for the desired duration.

Exclusions and Waiting Periods: Understand any exclusions or waiting periods associated with the policy.

Cost and Premiums: Compare quotes from different insurers to find the best value for your specific situation. Click here for factors that determine the cost of premiums.



Where to from here?


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Executive Income Protection is a valuable investment for company directors in Ireland. It offers financial security, protects your business, and provides peace of mind.


By taking the time to understand your needs and explore EIP options, you can secure a safety net for yourself and your company’s future. Remember, a healthy and financially secure director is key to a thriving business.



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