Executive income protection insurance

• Suitable for directors or employees of limited companies
• Usually counts as a tax-deductible expense to the company
• Protects an individual from loss of income due to illness or injury
• Tax-efficient way of taking out income protection
• Can cover up to 80% of the insured’s income, including dividends and directors’ loans
• Options to also cover employer national insurance payments and pension contributions, as well as spousal earnings

Policy details:

• Policy term – policy will usually run until the employee retires or reaches a maximum age of 70 years.
• Payout period – choose between short-term plans which pay out for 1-5 years, or a long-term plan that pays out until the employee is well enough to work again or reaches the policy end date.
• Deferral period – this is the amount of time the insured needs to be off work before the policy starts to pay out. The longer the deferral period the lower the premiums are. 1 to 4 weeks is a typical deferral period.
• Guaranteed or reviewable premiums – reviewable premiums are cheaper initially, however the insurer will retain the option to review the prices periodically (usually every 5 years). 
• Index linking – for extra cost, the plan may be set to track inflation, with benefits rising to match the Retail Price Index (RPI). This will cost more but it means the plan is likely to remain more relevant in the future.