Executive Income Protection

Company-funded income protection for directors and key employees — so illness or injury doesn't stop the salary.

Executive Income Protection is an income protection policy arranged and paid for by a limited company on behalf of a director or key employee. If the insured person is unable to work due to illness or injury, the policy pays a regular benefit to the company — which continues to pay the individual's salary. For company directors, it is often a more tax-efficient way to arrange income protection than a personal policy paid from post-tax income.

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What is Executive Income Protection?

Executive Income Protection works in the same way as personal income protection, but the employer — rather than the individual — takes out and pays for the policy. The benefit is paid to the company, which then pays it to the director or employee as salary. This means the individual continues to receive a regular income during a period of long-term illness or injury, and the company can meet its payroll obligations without drawing on reserves. Cover can typically be arranged for up to 80% of total remuneration — including salary, dividends, and employer pension contributions — and can include a benefit that covers the employer's National Insurance and pension contributions on top of the salary replacement. Deferred periods (the waiting period before the policy pays out) typically range from four weeks to 52 weeks, with longer deferred periods resulting in lower premiums.

Who is it suitable for?

Limited company directors who want income protection funded by the company rather than from personal income

Directors with dividend-heavy remuneration who struggle to arrange adequate personal income protection

Businesses that want to provide income protection as a valued employee benefit

Key employees whose long-term absence would significantly impact the business

Companies that want to attract and retain senior talent with a comprehensive benefits package

Directors who have already maximised other tax-efficient benefits and want further protection

Key Benefits

Premiums paid by the company — not from the director's personal income

Premiums may qualify for corporation tax relief, subject to HMRC rules

Can cover up to 80% of total remuneration, including salary and dividends

Can include employer's National Insurance and pension contributions in the benefit

Longer deferred periods available — reducing premiums for businesses with cash reserves

Helps the business retain key people during long-term illness without financial strain

More flexible than personal income protection for directors with complex remuneration

Whole of market — we compare all leading insurers to find the most suitable policy

No broker fees

Tax Considerations

The tax treatment of Executive Income Protection is different from a personal income protection policy and should be considered carefully. Premiums paid by the company may qualify for corporation tax relief as a business expense, subject to HMRC rules. The benefit is paid to the employer, who then pays it to the employee as salary — so it is subject to income tax and National Insurance in the normal way. This is in contrast to a personal income protection policy, where the benefit is paid directly to the individual and is generally tax-free. The overall tax position depends on individual and company circumstances. We recommend seeking independent tax advice to ensure the policy is structured correctly. Tax treatment may be subject to change.

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

Real-World Examples

Director with salary and dividends

A company director takes a salary of £12,500 and dividends of £80,000 per year. A personal income protection policy would only cover the salary element — leaving the dividend income unprotected. An Executive Income Protection policy arranged through the company can cover a much higher proportion of total remuneration, including the dividend income, providing meaningful protection if the director is unable to work.

Long-term illness — two-year claim

A managing director is diagnosed with cancer and is unable to work for 22 months. The Executive Income Protection policy — with a 13-week deferred period — begins paying a benefit to the company after the deferred period. The company continues to pay the director's salary throughout, maintaining their income and their relationship with the business during treatment and recovery.

Key employee benefit package

A professional services firm arranges Executive Income Protection for its four senior employees as part of a structured benefits package. The cost is modest relative to the salaries involved, and the benefit helps the firm attract and retain talent in a competitive market. Each policy is tailored to the individual's remuneration and circumstances.

Director with no sick pay entitlement

Unlike employees, company directors have no statutory sick pay entitlement beyond the standard SSP threshold. A director who is unable to work has no income unless the company continues to pay them — which may not be sustainable. Executive Income Protection ensures the company has the funds to continue paying the director's salary for as long as the policy term allows.

Frequently Asked Questions

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Why Choose JK Insurance Brokers?

Whole-of-market access — all leading insurers
FCA authorised & regulated (FRN 1047042)
No broker fees — ever
Business protection specialists
Personal, one-to-one service with Tom Dobbe
UK-wide advice by phone or video call
Ongoing reviews as your business grows

Speak Directly to Tom

I help company directors and business owners protect their families, shareholders and businesses.

01737 333249 [email protected]