Sick pay cover for company directors, paid for by your company
If illness or injury stopped you working tomorrow, would your company still pay you? Executive Income Protection replaces part of your income if you can't work, with your company footing the bill rather than you. Send a few details below and Debbie will call you to talk it through and get you a quote.
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Debbie will call you at the time you picked.
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- Debbie will call you to talk it through
- There's no obligation to go ahead
Need us sooner? Call 0330 22 333 10
Built for limited company directors
Executive Income Protection is designed for a specific situation, so it's worth checking it actually fits yours before you dig into the detail.
Director of your own limited company
Whether you're the only director or run the business with a small team, you can usually be covered, provided you're treated as an employee of the company for tax purposes.
Contractors trading through a company
If you work through your own limited company rather than as a sole trader, Executive Income Protection is typically available to you in the same way as any other director.
No formal sick pay in place
Many small company directors have little or nothing in place if they're signed off work. This fills that gap, funded by the company rather than your own pocket.
Executive Income Protection isn't available to sole traders or equity partners, because it needs an employer to take the policy out on an employee. If that's your situation, Debbie can talk you through personal income protection instead.
In plain English
Your company takes out the policy and pays the monthly premium, not you personally. If illness or injury stops you working for longer than an agreed waiting period, the insurer pays a regular benefit to the company, and the company passes that on to you through payroll, just like your normal salary.
"This is the one I see directors overlook most. They've sorted life cover but never stopped to ask what happens to their income if they're signed off work for six months. For a one or two person company, that question matters a lot."
A simple example
Say illness keeps you off work for several months. Without cover, the company's income from your work stops, and so, often, does yours. With Executive Income Protection in place, once your chosen waiting period has passed, the insurer starts paying a regular benefit to the company, which the company then pays on to you as salary, so you keep an income coming in while you recover.
Why directors choose it
Executive Income Protection was built with company directors in mind. These are the main reasons it's worth a look.
Company pays, not you
Premiums are paid by the company rather than from your own taxed income, which for many directors makes cover more cost effective.
Choice of waiting period
Pick a waiting period that suits your circumstances and how much the company could cover from its own reserves in the meantime.
Flexible benefit term
Cover can usually run to a chosen retirement age or a fixed term, so you can match it to how long you plan on working.
One life, one policy
It's designed around a single director or employee, so there's no need for a group scheme or a minimum headcount.
Works alongside Relevant Life Cover
Many directors set this up alongside life cover, so they're protected against both the risk of dying and the risk of not being able to work.
Keeps the business running
Because the company keeps paying you, it can carry on covering its own costs through your absence rather than everything stopping at once.
Worth knowing before you apply
- Payments you receive go through payroll, so income tax and National Insurance apply, unlike some personal protection policies where the payout is tax free.
- Cover normally ends if you leave the company, retire, or the company stops trading, so you may need to arrange new cover if your circumstances change.
- It isn't available to sole traders or, in most cases, equity partners, because the policy needs an employer to set it up on behalf of an employee.
- Benefit levels are usually capped by the insurer as a proportion of your earnings, not an amount you choose freely.
- As with any insurance policy, cover and premiums depend on underwriting, and a payout isn't guaranteed. It depends on the policy terms being met.
- If premiums stop being paid, the cover can lapse.
Three steps to get set up
A quick conversation
Debbie talks through your company structure, your income, and what the business could absorb if you were off work, so the cover fits your situation.
Whole of market comparison
She compares providers across the market for suitable cover, waiting period and a likely premium, rather than offering just one insurer's policy.
Policy set up properly
Debbie arranges the policy and liaises with your accountant on the tax side, so the paperwork is one less thing for you to chase.
Executive Income Protection, answered
Who can take out Executive Income Protection?
It's available to directors and employees of limited companies, including contractors who trade through their own company. It isn't available to sole traders or, in most cases, equity partners, because the policy has to be set up by an employer.
How is it different from personal income protection?
The main difference is who pays and how the benefit reaches you. With Executive Income Protection, your company pays the premium and the benefit is paid to the company, which then pays it to you through payroll as salary. With a personal policy, you pay the premium yourself and the benefit is usually paid tax free straight to you.
How is it different from Relevant Life Cover?
They cover different things. Relevant Life Cover pays a lump sum if you die or are diagnosed with a terminal illness. Executive Income Protection pays a regular monthly benefit if you're unable to work due to illness or injury. Many directors have both.
Will the payments I receive be taxed?
Yes. Because the benefit is paid to the company and then on to you as salary, it goes through payroll in the normal way, so income tax and National Insurance apply as they would to any other salary payment.
What happens if I leave the company?
Cover normally ends when you stop being an employee or director of the company that set it up, for example if you leave, retire, or the company closes. You'd then need to arrange new cover if you still want protection in place.
How much cover can I get?
Insurers usually cap the benefit at a proportion of your pre-incapacity earnings, often up to around three-quarters depending on the provider. The exact amount depends on your income, the insurer's own limits and underwriting.
Ready to find out what it would cost?
Send your details below and Debbie will call you to talk it through and get you a quote. No obligation.
Thank you, we've got your details
Debbie will call you at the time you picked.
- Your details have gone straight to DS Financial
- Debbie will call you to talk it through
- There's no obligation to go ahead
Need us sooner? Call 0330 22 333 10