Executive Income Protection- Can you afford not to have it?
Running a small business is no small feat. You’re constantly juggling various responsibilities, striving to keep your enterprise profitable and resilient. But amidst the daily hustle, have you ever considered protecting your income and security in case you, as a business owner can’t work due to illness or injury? It’s a critical aspect of safeguarding not only your company but also your personal financial well-being.
We will explore the world of “Executive Income Protection” – a tailored solution for small and medium-sized businesses designed to mitigate the financial impact when an owner, director or a key employee can’t work. Let’s delve into how this type of protection works and its various facets.
How Does Executive Income Protection Work?
Executive Income Protection is a specialised insurance solution that provides financial support in the form of sick pay benefits for directors and business owners. This can also be suitable for key employees. It serves as a safeguard for both your business and personal financial health.
The mechanics of Executive Income Protection are relatively straightforward. Here’s a breakdown:
- Policy Ownership: The business as employer arranges and pays for the policy.
- Insured Individuals: The policy covers the life of the employee, ensuring protection for the person insured.
- Benefit Payment: If the insured employee becomes ill or injured and is unable to work, a monthly benefit is claimed. This benefit is paid to the employer (the policy owner), who then passes it onto the employee through PAYE, thus funding ongoing sick pay.
Coverage Limits: What Can You Insure?
You can insure up to 80% of your pre-incapacity earnings. This includes a wide range of components such as salary, bonuses, P11D benefits, and dividends. If you’re a business owner, you can even cover income paid to a spouse or partner, provided they are not responsible for generating company revenue and haven’t insured those earnings elsewhere.
Tax Treatment of Premiums
One significant advantage of an Executive Income Protection plan is its favourable tax treatment. Typically, the premiums are considered allowable business expenses and are subject to corporation tax relief. Additionally, the policy doesn’t impose a P11D or benefit in kind on the employee. This attractive tax position makes Executive Income Protection a compelling alternative to traditional ‘personal’ Income Protection policies, where monthly premiums are paid from net salary.
Pension Contribution & National Insurance Cover
The benefits of Executive Income Protection extend beyond illness and injury coverage. You can also include pension contribution cover to fund the cost of pension contributions that the business continues to make on behalf of the employee. Furthermore, National Insurance cover helps protect the employer’s NI liability when providing income benefits through payroll.
Added Services go that extra mile
Executive Income Protection offers comprehensive additional services to policyholders. These services can provide invaluable support when you need it the most. They include:
- Expert Medical Advice Services: Access to expert medical advice via a convenient app or phone, wherever you are.
- Remote GP 24/7: Speak with a UK doctor through video or phone consultation to discuss any health concerns.
- Prescription Services: Obtain private prescriptions without visiting your local GP.
- Second Opinion: Receive a second opinion after being diagnosed with a serious illness.
- Remote Physiotherapy: Access up to five sessions with a UK-trained physiotherapist and receive a personalized treatment plan.
- Remote Psychological Services: Receive up to five sessions of mental health support from a network of highly trained therapists.
- Discounted Health MOTs: Assess your overall health, identify health risks, and areas for improvement.
Explore the Benefits
If you’re a small business owner, Executive Income Protection can offer you the peace of mind you need. It’s not just about supporting your business; it’s about protecting yourself and your family’s financial stability. To find out more about how Executive Income Protection can benefit you and your business, explore your options further.
Remember, your health and financial well-being are just as important as your company’s success.
Don’t wait until it’s too late to ensure both are secure.
Call Carol on 01244 324891 or email her at Carol@grosvenor-insurance.com for further help and advice