Executive income protection gives you the financial reassurance you need if you or another director can’t work because of ill health. Income protection paid out over £880 million last year, with an acceptance rate of nearly 80%.
It shows just how vital this type of workplace benefit can be. At Dragonfly Crowd, we support you in sourcing the right policy as your independent insurance broker, taking the time to understand who you are and what you do.
Here’s what you must know about executive/director income protection insurance.
Income protection insurance bespoke for directors
Executive income protection is a form of group income protection targeted at the senior executives at the heart of every business.
If a senior leader, director or business owner can’t work because of ill health, this cover pays a fixed monthly income to provide financial peace of mind. Many policies also offer additional benefits, like physiotherapy and mental health treatment, to support a return to work.
Unlike other policies, claims aren’t tied to a specific illness but simply being signed off by a doctor. If you have to spend time away from work, these policies protect your personal income, offering vital stability at an uncertain time.
However, contrary to popular belief, you don’t have to choose between protecting yourself and supporting employees. Today’s group policies can be tailored to include senior leaders and the wider workforce.
Adding group income protection can be an ideal way of bolstering any employee benefits package. If you’d like to learn more about how you can tailor a policy accordingly, get in touch with a Dragonfly Crowd expert today.
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How group income protection works for directors and their businesses
Group income protection policies are arranged by your business. You’ll choose the scheme’s structure, who’s covered, the benefits provided and when payments will kick in.
Typically, directors and senior employees receive benefits that reflect both their positions and their wages. Naturally, policy limits, benefit levels and underwriting requirements depend on the insurer and the policy you choose.
You can expect the process to work in three stages:
- Assess – Work with a Dragonfly Crowd expert and discuss your business, who you want to protect and existing employee benefits.
- Search – Your insurance intermediary will explore a wide panel of insurers to identify the policies that work best for your business and its executives.
- Cover – Get your chosen policy in place. Once your policy is active, you’ll be able to lodge a claim if any of your executives or directors cannot come into work for an extended period due to ill health.
Income benefits are paid out after a deferred period, which varies from policy to policy. Additionally, your policy may provide extra benefits, such as rehabilitation services and mental health support.
What executive income protection covers
Executive income protection is designed to replace a portion of your income whenever you can’t work because of ill health. Unlike cover for critical illness, you receive regular repayments after being signed off by a doctor, rather than a single lump sum due to a particular named condition.
Exact cover varies depending on the policy, but some of the considerations you’ll have to factor in when taking out your policy include:
- Proportion of salary covered.
- Maximum monthly benefit available.
- Deferred period before income payments start.
- How long benefit payments will continue.
- Additional support and rehabilitation options.
The benefits of executive income protection for directors
Executive income protection offers personal and professional peace of mind if you can’t come into work because of your health. However, it’s not the only benefit of having this type of employee benefit in place.
Here are some of the advantages of investing in director income protection:
- Regular payments to replace salaries when senior figures can’t work.
- Directors have peace of mind that they can maintain some level of financial stability.
- Extra rehabilitation support to help directors return to work.
- Supporting both senior employees and the rest of the team.
- Favourable tax treatment because these benefits are usually treated as a business expense.
It’s also worth mentioning that if you’re looking to hire top talent, executive income protection can be a highly attractive perk. Ultimately, by bringing in the right people and encouraging them to stay, you’re investing in your organisation’s growth story.
Director income protection vs other protection policies
Director income protection may be a singular benefit, but it’s typically viewed through the lens of the overall benefits package on offer. Here’s a breakdown of similar policy types you may want to consider alongside executive income protection.
- Group Income Protection – Provides a regular income to all employees when they cannot return to work. This may be bundled together with director income protection under the same policy.
- Individual Income Protection – This functions the same as group income protection but applies to a specific named person only. Likewise, a business may take out key person insurance, which helps a firm manage the financial impact of losing a key person.
- Group Life Insurance – Provides a benefit to an employee’s beneficiaries if they die while they’re covered.
- Group Critical Illness Cover – Offers a lump sum payment if an employee is diagnosed with a named condition.
On a side note, you may think you don’t need executive IP if you have key person insurance, but they serve different purposes. The former is designed to protect the business, whereas the latter focuses on providing benefits to the individual. Group policies are often preferable for efficiency reasons simply because they negate the need to take out and maintain individual policies for each key person.
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Choosing the right protection policies as a director
The best income protection policy for your firm depends on how your business functions, its people and what it wants to achieve. At Dragonfly Crowd, we understand how complicated the market can be, including the various policy terms and exclusions.
Our team takes the time to understand your business before exploring a wide panel of insurers to find policies that align with your vision. Whether you’re interested in an executive income protection policy or a tailored group policy that gives senior figures peace of mind, get in touch with Dragonfly Crowd today.
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