Executive Income Protection Insurance Quotes

The Problem for The Self Employed

If you are self employed or run your own limited company then unlike many employed people you will not have any sick pay. Whereas those employed by the NHS and local government normally have 6 months full pay then 6 months half pay self employed business owners have none. One way in which you can create a policy that can cover you is with an income protection policy. However a personal income protection policy is paid for by the employee or business owner out of their already taxed business profit. This one perfectly legitimate way of protecting your income and if a claim is made the monthly sum assured would be paid to the individual free of tax an National Insurance. The downside is that tax relief cannot be claimed on the monthly insurance premiums and thus this is not the most tax efficient way of protecting your income.

Executive Income Protection

Another policy is the Executive Income Protection Insurance. With this type of cover the company or business pays the monthly premiums. This way tax relief can be claimed on the premiums and deducted as a business expense. However on a claim the sum assured would be paid to the company and treated as a trading receipt. Therefore once the sum assured is paid to the employee or business owner the sum assured is subject to Tax and National Insurance.

Benefits of Executive Income Protection Policy

Which policy is best will depend on your Tax position and sum assured requirements. However most business owners and company directors do not like paying tax and paying into an Executive Income Protection Policy can be a good way to save this tax. On the upside the policy will provide a useful benefit far better than the sick pay that most employees get. Normally the executive income protection policy will have a sum assured of around 65% of the gross earning of the employee or company director. These policies are taken for a term and typically the term of the policy should be set to the employees 65th birthday.

Fully Underwritten

As far as claims are concerned. Executive Income Protection Policies have a very good claims payout record. These policies are fully underwritten at the outset and provided full medical and relevant details are disclosed the policy would pay out for accident or illness that enabled the policyholder to be unable to work.