What is Executive Income Protection?
Executive Income Protection is the process of insuring a key member of staff and can be used to provide an income replacement in the event of them being unable to work due to sickness or injury. The money is paid as a monthly benefit which means that you can insure the taxable earned income of the employees. All benefits are paid through the PAYE system.
Who can use Executive Income Protection?
A business can set up executive income protection on any and all employees.
Why do I need Executive Income Protection?
Executive income protection will help a business’s employees financially if they do find themselves unable to work. Almost everybody has monthly outgoings, and if an employee’s income was to stop, they would often find themselves in more financial trouble. By using executive income protection, you are helping both your business and employees.
How does Executive Income Protection work?
The monthly benefit is paid when a life covered by the insurance becomes unable to do their job due to sickness or injury. The policy is arranged on a ‘life of another’ basis meaning that it is owned by the company, and so when a claim is made, the benefit is paid directly to the business. Your business may then use the money to provide the employee a replacement of any lost pay due to being off with sickness or injury.
What are the maximum benefits you can claim?
The maximum benefits are calculated on 75% of the employee’s taxable income before incapacity plus contributions to the insured persons pension by the company and the employers National Insurance contributions.
When is the benefit recieved?
Upon application of the insurance, you would choose a deferred period. This period is the length of time between when the person insured becomes incapacitated and the benefit beginning.
When does the benefit stop?
The insurance company will stop paying the benefit once the individual goes back to work or leaves employment of the company. If the employee does neither and is off work for a longer period, the benefit will stop when the policy term ends.