Business Protection

Executive Income Protection

Company-funded income protection for directors and key employees.

Executive Income Protection is an income protection policy arranged and paid for by a company on behalf of a director or key employee. It provides a regular income if the insured person is unable to work due to illness or injury, and can be structured as a tax-efficient employee benefit.

What is Executive Income Protection?

Executive Income Protection works in the same way as personal income protection, but the policy is taken out and paid for by the employer. The benefit is paid to the employer, who then pays it to the employee as salary. This means the employee continues to receive an income if they are unable to work, and the employer can continue to meet their obligations. Premiums are typically treated as a business expense.

Who is it suitable for?

Company directors who want income protection funded by their company

Businesses that want to provide income protection as an employee benefit

Key employees whose absence would significantly impact the business

Directors with high earnings who want comprehensive income protection

Businesses that want to attract and retain key talent

Companies that want to ensure continuity of key roles

Key Benefits

Premiums are typically treated as a business expense

Provides a regular income if a director or key employee cannot work

Can cover a higher proportion of income than personal policies

Can include employer's National Insurance contributions and pension contributions

Helps businesses retain key employees during long-term illness

Whole-of-market search finds the most suitable policy

Tax Considerations

Premiums paid by the company are typically treated as a business expense for corporation tax purposes. The benefit is paid to the employer, who pays it to the employee as salary — so it is subject to income tax and National Insurance in the normal way. This is different from a personal income protection policy, where the benefit is paid directly to the individual and is generally tax-free. The overall tax position should be considered carefully, and we recommend seeking independent tax advice.

Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.

Example Scenarios

Company director

A company director suffers a serious illness and cannot work for two years. The Executive Income Protection policy pays a benefit to the company, which continues to pay the director's salary — maintaining their income and the company's ability to retain them.

Key employee benefit

A business arranges Executive Income Protection for its five key employees as part of a benefits package. This helps attract and retain talent, and ensures the business can continue to support employees during long-term illness.

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