PMS Business
Executive Income Protection
Help protect the income of an eligible director or employee when illness or injury prevents them from working for an extended period. The business owns the policy and receives the benefit, so it can keep paying them.
What is Executive Income Protection
Executive Income Protection is an income protection policy owned and paid for by the employer for an individual director or employee. If they cannot work because of illness or injury, the insurer pays a monthly benefit to the business after a chosen waiting period.
How Executive Income Protection works
The business chooses the level of cover, the deferred period and how long benefit can be paid. If a valid claim is made, the benefit is paid to the business, which normally continues to pay the person through payroll.
Who may be covered
Directors and employees of a limited company or LLP, including directors who own the company. Insurers set age limits and require the person to be actively at work when cover starts.
Income and employment benefits that may be protected
Depending on the insurer, cover may be based on salary and, in some cases, dividends, employer pension contributions and employer National Insurance. Each insurer has its own definitions and maximum limits, so we check what can be included for each person.
Choosing a deferred period
The deferred period is how long the person must be unable to work before benefit starts — commonly 4, 13, 26 or 52 weeks. A longer period usually means a lower premium; it should match how long the business could pay the person itself, including any sick pay policy.
Choosing the benefit payment period
Benefit can be paid for a limited term, such as one, two or five years per claim, or until the end of the policy. A shorter payment period usually costs less but offers less protection against long illnesses.
Benefits for the business and employee
The business can keep paying a valued person through a long absence without the full cost falling on its cash flow, and the person has reassurance that their income is protected. Many insurers also offer rehabilitation support, which varies by provider.
Executive Income Protection compared with personal Income Protection
| Feature | Executive Income Protection | Personal Income Protection |
|---|---|---|
| Who owns and pays | The employer | The individual |
| Who receives benefit | The employer, which pays the person through payroll | The individual |
| Income that may be covered | Salary and, with some insurers, dividends, pension and employer NI | The individual's earnings, within insurer limits |
| If the person leaves | Cover usually ends; some insurers allow conversion | Unaffected by employment |
A general comparison. Policies, limits and tax treatment vary.
Potential benefits and important considerations
Benefits
- Monthly benefit paid to the business during a long absence
- Can include elements beyond salary, depending on the insurer
- Deferred and payment periods chosen to suit the business
Things to consider
- Claims depend on the policy's definition of incapacity and other terms
- Insurer limits and definitions vary
- Tax treatment depends on circumstances and may change
How it works
How we arrange executive income protection
Matching the cover to your sick pay policy and the person's remuneration.
- 01
Review remuneration and sick pay
We look at how the person is paid and how long the business could support them itself.
Cover basis agreed - 02
Choose periods and limits
We compare deferred periods, payment terms and insurer limits.
A policy shape that fits - 03
Apply and coordinate
We manage the application and explain how a claim would be paid through payroll.
Cover in place, process understood
Ready to take the first step?
Your initial consultation is without obligation. Speak with an adviser in Croydon or over Zoom.
Executive Income Protection FAQs
Usually yes, provided they are an employee of the company and meet the insurer's conditions.
Some insurers will include dividends within their limits; others will not. We check each insurer's definitions for you.
Each policy has its own definition of incapacity, for example being unable to do your own occupation. A claim is paid only if that definition is met.
Statutory and company sick pay still apply. The deferred period is usually chosen to start benefit around when company sick pay ends.
Related PMS Business services
Arrange an Executive Income Protection review
Speak to us about your business. Your first conversation is without obligation.
Important information
Benefits are paid only when the policy definition of incapacity is met, after the deferred period, up to the insurer's limits and subject to the policy terms.
Tax treatment depends on individual and business circumstances and may change. We do not give tax advice; please speak to your accountant or tax adviser. The Financial Conduct Authority does not regulate tax advice.
Before you proceed we will confirm in writing whether PMS Mortgages advises on and arranges this cover, or introduces you to another firm, and what that firm's role is.