Executive Income Protection: Securing Your Financial Future

Firstly, I want to introduce the fantastic product executive income protection. It is a policy created for business owners that offers excellent coverage in a tax-efficient way.

If you are a business owner and are looking for income protection, executive income protection is the best option.

Some key benefits:

– Fully paid by the business as an expense
– Save 62% in tax on average
– Get 80% coverage on both salary and dividend
– Cover the income of you and your spouse of your salary is shared between both

Tax-efficient income protection

Usually, income protection is paid for as a personal policy and from net tax income. This means the business owner will have paid corporation tax and dividend tax before the funds land in their account to pay the income protection premiums.

With executive income protection, this isn’t the case. The business pays for premiums as an expense. The business claims corporation tax relief, but there is no benefit in kind to pay either.

On average, our clients save 62% in tax when using executive income protection, which can add up to tens of thousands of pounds in savings in some cases.

Get the coverage business owners need

As a business owner, you know it’s more tax efficient to take income as a mixture of a small salary, usually £1,000 a month, and the rest in dividends. The issue is that personal income protection plans usually only consider income. This would leave a large gap in cover as most of your income will come from dividends.

Executive income protection considers both salary and division and offers 80% of this as maximum cover vs. a personal policy that only provides 60%.

Share your salary with your spouse.

Another standard setup is where business owners pay their salaries to both spouses to take advantage of the basic rate tax bands. In this case, a usual income protection policy would not be suitable, as if the primary earner was ill, the policy would only pay their share of the income and not the spouse’s.

With executive income protection, this isn’t the case. Your and your spouse’s share of the income can be insured in the same policy. Therefore, 80% of the joint salary would be paid in the event of an illness.

Why securing your income is essential?

We are all much more likely to have a period where we are unable to work due to illness or injury that to die before age 75. Therefore, protecting these gaps in income can be essential for a business owner.

If, like many business owners, you are essential to the business, then having a period where you can’t work could be catastrophic for the business and your personal life.

Even though you can’t work, bills still need to be paid, and if the business isn’t generating any income, how long can it sustain this? This is where a monthly payment that covers 80% of your usual income could be the lifeline you need.

Is Executive Income Protection right for you?

If you are a business owner then it would be hard to find a most costs effective and tax efficient option. With coverage of 80% of salary and dividend this really cant be matched by a personal policy.