Cover 80% of your income with executive income protection

The Quick Version

• What is it: Income protection arranged through your limited company, covering salary and dividends combined, up to 80% of total remuneration
• Who it's for: Limited company directors whose income includes dividends, especially where a spouse also draws dividends from the business
• What makes it different: Covers dividends as well as salary, higher benefit limits than personal IP, and the potential for corporation tax relief on the premiums
• How to get it: One call - we search every UK insurer and present your options

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What Is Executive Income Protection?

Ask Yourself This Question

Here's a question worth asking yourself honestly. If you couldn't work for six months, whether through a serious illness, a significant injury, or something that kept you out of the business for an extended period, what would actually happen to your income?

For most directors, the answer is uncomfortable. The business might struggle to pay you. Your dividends might stop. And if you've been relying on a personal income protection policy to cover that scenario, there's a very good chance it wouldn't cover nearly as much as you think, because most personal policies are based on salary alone, and most directors draw the majority of their income as dividends.

Executive Income Protection Is Built for the Way Directors Are Actually Paid

Executive income protection is a policy arranged and paid for by your limited company, covering up to 80% of your total remuneration - salary and dividends combined - if you're unable to work due to illness or injury. Not 60% of your salary. 80% of everything you actually earn.

The company pays the premiums directly, and where the arrangement meets HMRC's rules for allowable business expenses, they can qualify for corporation tax relief. You're not funding the cover from income that's already been taxed. The business is paying for it before any personal tax applies.

When a claim is made, the company receives a payout and then pays it to you as a director as PAYE. Your income continues. Your family's financial position is protected. And the business has been funding the whole arrangement tax-efficiently from day one.

Can Executive Income Protection Cover Spouse Dividends Too?

Yes, and this is one of the features that makes executive income protection particularly valuable for husband-and-wife companies. If your spouse draws dividends from the business, those dividends can be included in the cover calculation as well. No personal income protection policy allows this. Executive income protection does, which means for family companies where income is shared between two shareholders, the cover reflects the full financial picture rather than just one person's remuneration.

Is This Different From Personal Income Protection?

Completely, and the difference is worth spelling out in full below, because it's the reason personal income protection leaves most directors under-protected.

How much does executive income protection cost?

The table below breaks down premiums for both £50,000 and £80,000 cover across a range of ages.

How Does Executive Income Protection Work?

The Company Takes Out the Policy

Your limited company is the policyholder. The company applies for the policy, pays the premiums, and receives any claim. Where the premiums meet HMRC's wholly and exclusively test for business expenses, the company can claim corporation tax relief on them, with no personal tax or Benefit in Kind charge for you as the director.

What Triggers a Claim?

If you're unable to work due to illness or injury and that inability extends beyond your policy's deferred period, the insurer begins paying a monthly benefit to your company. Learn more about choosing the right deferred period below.

How Much Does the Policy Pay Out?

The policy pays a monthly benefit equivalent to a proportion of your total remuneration, up to 80% of salary and dividends combined. That benefit is paid to the company, which then passes it to you as PAYE income.

How Long Does the Payout Continue?

Most executive income protection policies are written to pay out until the earlier of your return to work, the end of the policy term, or your selected retirement age. For most directors, that means the policy provides long-term protection - not just a short-term bridge - if a serious illness or injury prevents them from working for an extended period.

What Happens to the Payout?

The payout arrives in the business bank account. The company then pays it to you, typically as salary, which means income tax and National Insurance apply at that stage. This differs from how a personal income protection payout is treated: the benefit is paid directly to you and is generally tax-free in your hands.

Specifically designed around the unique ways company owners are paid

Why Personal Income Protection Isn’t Enough for Directors

Personal income protection is a perfectly good product, but for employees. For directors, it has a fundamental structural problem that most people don't discover until they actually try to claim.

The Dividend Problem

Most directors draw a modest salary that is typically around the National Insurance threshold, and take the rest of their income as dividends. Personal income protection policies calculate the benefit based on your earned income, which means your salary. Dividends don't count.

For a director drawing £12,570 in salary and £80,000 in dividends, a personal policy would calculate the benefit based on £12,570. The cover level that results is around £7,500 a year, which is barely enough to cover basic outgoings. A personal policy leaves 92% of their income completely unprotected.

The Benefit Cap Problem

Even if a personal policy could cover dividends, the benefit would still be capped at 60% of insured income, and because that's calculated on your salary alone, which for most directors is modest, the resulting maximum is often too low to be meaningful.

Executive income protection raises the cap to 80% and applies it to your total remuneration, so the ceiling itself is set on the right number, not just a higher percentage of the wrong one.

The Spouse Dividend Problem

For husband-and-wife companies, there's a third gap: personal cover only ever looks at your income, never your spouse's dividends - something executive income protection can include, as covered above.

The Tax Efficiency Problem

Personal income protection premiums are paid from your personal income, money that has already been taxed. There's no tax relief on the premiums. Executive income protection premiums are paid by the company, and where they meet HMRC's wholly and exclusively test for business expenses, they qualify for corporation tax relief.

The Bottom Line

For most directors, personal income protection isn't just suboptimal - it's fundamentally inadequate. It covers the wrong income at the wrong level with the wrong tax treatment. Executive income protection was built to fix all three problems at once.

How Much Cover Do You Need

Start With What You Actually Need to Receive

The right starting point isn't your income, it's your outgoings. What does your household genuinely need every month to maintain its financial position? Mortgage or rent. School fees, if applicable. Pension contributions. Living costs. Business obligations that would continue even if you weren't working. Add those up to find the net monthly income you need the policy to replace.

Work Backwards to the Cover Level

Because the payout is paid to your company first and then to you as salary, with income tax and National Insurance applying at that stage, the gross benefit level needs to be set higher than the net income figure you worked out above.

A benefit that looks right as a percentage of your gross remuneration can still leave you short once tax is taken into account, which is why this is worth calculating properly with your adviser rather than picking a figure that sounds close enough.

The 80% Ceiling

Executive income protection policies allow you to cover up to 80% of your total remuneration, with salary and dividends combined. This is the maximum the insurer will provide, designed to keep an incentive to return to work. For most directors, 80% of total remuneration is a meaningful and generous benefit level - significantly higher than the 60% of salary available under a personal policy.

Don't Forget the Spouse Dividend Calculation

If your spouse also draws dividends from the business, remember to include them in your total remuneration figure, as covered above; executive income protection is one of the few products that allows this.

The Deferred Period

The deferred period is the gap between when you can no longer work and when the policy starts paying out. It's one of the biggest levers on the premium, and the longer the deferred period, the lower the cost.

The right deferred period matches how long your business can realistically keep paying your salary and dividends before the financial pressure becomes acute. For most directors, that's somewhere between three and six months.

The ability to add both incomes into one policy is essential for some business owners

Executive Income Protection vs Personal Income Protection

The Fundamental Difference

Personal income protection was designed for employees. Executive income protection was designed for directors. That distinction drives almost every difference in the table below: the benefit level, what income is covered, who pays, and the tax treatment on both sides.

How to Set Up Executive Income Protection

Setting up executive income protection is more straightforward than most directors expect. The structure sounds technical, but in practice your adviser handles the complexity. Your job is to understand what level of cover you need and answer a few straightforward questions.

Step 1: Work Out the Right Cover Level

Start from your net monthly outgoings and not a percentage of your gross remuneration, then work backwards to the gross benefit level that produces it after tax. This conversation is worth having properly rather than picking a number at random.

Step 2: Confirm Your Total Remuneration

Because executive income protection can cover salary and dividends combined, and in some cases your spouse's dividends too, the insurer needs a clear picture of your total remuneration from the company. This typically means your salary as shown on your P60, your dividend drawings for the last two or three years, and your spouse's dividend drawings if those are to be included.

Step 3: Choose Your Deferred Period

The right deferred period matches how long your business can realistically continue to pay your income before financial pressure becomes acute.

Step 4: Get a Whole-of-Market Quote

Executive income protection premiums vary significantly between insurers, not just in the headline cost, but in the underwriting approach and the definition of incapacity used. The definition of incapacity in particular is worth paying attention to. Some policies pay out if you're unable to do your own occupation. Others pay out only if you're unable to do any occupation.

For a specialist director or highly skilled professional, own occupation cover is significantly more valuable. At Executive Life, we search every insurer in the market, compare both the premium and the policy terms, and identify the best option for your specific circumstances.

Step 5: Complete the Application

The application covers your health, medical history, lifestyle, and income details. For most directors in good health, the process is straightforward. Where the insurer needs additional medical information, your adviser manages that process on your behalf.

Step 6: The Company Starts Paying Premiums

Once the policy is in place, the company pays the premiums directly as a business expense. Your accountant handles the tax treatment; whether the premiums qualify for corporation tax relief depends on the policy's purpose and structure, as we covered in the tax section, so it's worth having that conversation before the first premium is paid.

Don't Wait Until You're Filing a Claim to Find Out

Most directors who rely on a personal policy don't discover the gap until they're actually trying to claim, by which point it's too late to fix. If you draw dividends from your company and would face a real financial problem going six months without pay, it's worth knowing exactly what you're covered for before you need it, not after.

One call gets you a whole-of-market comparison built around your actual salary and dividends, not just the number a personal policy would use.

*Assumes a 25% corporation tax rate and that the premium qualifies for corporation tax relief as an allowable business expense (HMRC's wholly and exclusively test). Actual savings depend on whether this test is met and will vary by individual circumstances. Reviewed September 2026