If an employee is unable to work due to injury or illness, executive income protection can provide financial support to cover some of the associated costs to the employee and business.
Our independent brokers can help you compare the options available and find the most competitive executive income protection quote available. They’ll aim to answer any of your questions, find out more about your needs, and support you before, during and after making a purchase.
Companies can purchase executive income protection insurance policies to protect themselves and their employees against the cost of absence. It’s often popular with smaller businesses where staff absences may pose a greater risk, but larger companies may also utilise this insurance for their senior staff members.
Executive income protection can cover anyone from an employee to a director. If the insured individual cannot work due to illness or injury, the policy will cover a percentage of their pre taxed income. You may also be able to cover their dividend payments, P11D benefits, pension and National Insurance contributions too. If an insured employee is unable to work, the business will receive a payout that can be used to provide financial support to their employee who’s unable to work.
You may have flexibility over what’s covered in your policy, the limits, and whether additional benefits are included for your employees. Some of the options available include:
Deferment period length
This is how long your employees must be unable to work until your provider pays out.
Pension and National Insurance contributions
Increase the benefits to cover the costs of these payments.
Support services
Such as helplines, wellbeing support and tailored health and fitness plans.
Claim amount
This is the percentage of the employee's pre taxed income which will be paid out when a successful claim is made.
Inflation protection
Your policy claim amount will vary in line with the retail price index, which protects against inflation rises.
The cover is intended to help employees with their financial commitments while they can’t work, as well as helping a business cover the costs they incur, such as pension and National Insurance contributions. While executive income protection may be available to purchase for all members of a business, certain individuals may benefit from this insurance more than others. With this in mind, here are some examples of the types of employees that often receive this cover:
Basic sick pay may not be enough for your employees to cover their expenses. Providing this support can provide them with financial peace of mind and security.
Offering executive income protection as part of a benefits package may help to attract employees into your business, as well as retaining them in the long term.
Executive income protection policies are flexible, and there are many ways that you can tailor the policy around your wants and needs.
The claim payout can help to reduce some of the company’s costs related to sickness, such as pension payments and National Insurance contributions.
Providing additional support to unwell or injured employees may demonstrate that you’re a conscious employer who’s committed to the wellbeing of its workforce.
Executive income protection is an employee benefit paid for and organised by the business. If you’re an employee, you may not have any input into how the policy is structured unless you’re in an executive position or your employer has asked for your involvement. Here are some examples of how the insurance may differ for the two parties involved.
You may be able to deduct the cost from pre tax profits.
You’re responsible for purchasing the policy and choosing which employees to cover.
In the event of a claim, the payout will be sent to the company account.
You’ll need to decide on the policy details, such as limits and deferment periods.
You’re responsible for reporting this to the provider if you need to make a claim.
You may pay tax on receiving this benefit.
You wont pay the policy premiums, as your employers handle this.
You won’t directly receive a payout in the event of a claim.
You may not have control over the finer policy details unless you’re involved in the process.
Any payments you receive will be deposited through PAYE.
When you make a claim, the process may vary depending on who your provider is and whether you’ve included additional benefits and options. For example, you may be able to include additional support for your employees that protects them if they have recurring health problems that lead to several periods of absence. The following is an example of what may happen when a claim is made:
If an employee cannot work through injury or illness, and the deferment period has passed, the business will need to make a claim on the employee's behalf.
If the claim is valid, the provider will pay out a monthly cash sum, depending on the claim limit purchased.
If an employee returns to work, passes away, or the coverage period ends, the payout will end.
If an employee returns to work after a claim has been made but they’re unable to work due to the same medical problem within 12 months, the payout will resume.
If an employee returns to work, but their role has changed due to the illness, the payout amount may be adjusted to match their new earnings.
How much your company pays for executive income protection depends on many varying factors. To understand the cost, we recommend you go through a comparison service and review the options available in the UK market. Adding additional cover or insuring certain employees may cause price fluctuations, but we can help you understand this while building your policy. Some examples of what these may be include:
We offer a free comparison service for any business that’s considering executive income protection. We work independently from the providers, meaning we can answer questions about all insurers while providing you with an unbiased comparison service. You’re under no obligation to purchase any of the policies we compare for you, and we welcome you to contact us no matter which stage of purchasing process you’re at.
“Supporting unwell or injured employees and their families can demonstrate to your entire workforce that you’re a conscious employer. The policy options are flexible, and no matter what your budget is, there may be a coverage option that provides a benefit to you and your team”
Our team will personally review your options
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