This type of policy pays out a regular monthly benefit should a company director become too ill or injured to work. It is popular with contractors and directors working in their own limited company and covers up to 80% of their income (wages or dividends) in a tax-efficient way.
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Executive Income Protection operates in a very similar way to Personal Income Protection, providing a regular income if the person insured is unable to work due to illness or injury.
The main difference between the two types of policy is that Executive Income Protection can cover up to 80% of the individual's income, whether from wages or dividends or both, whereas most standard policies typically only cover up to 60%.
As such, it is an attractive benefit for high-earning small business owners and contractors.
The cost of the premiums is determined by how much cover is required, the age of the individual to be covered, any existing or past health conditions, what their current role entails, how long the cover is to last, and how long they are prepared to defer the first payment.
The premiums are paid by the company and are tax-deductible, which is an additional saving compared to personal policies.
Along with other benefits available, Executive Income Protection can be a valuable component of an overall financial plan, especially those with high incomes and significant financial responsibilities.