Income protection insurance can be an important form of protection in any employee's financial portfolio. In most businesses there are certain employees who are considered vital to the success of the business.
Often they are the highest paid and have the most generous benefit packages. Directors' and executive income protection insurance is taken out by the business on these key employees.
This insurance provides protection for your business in the event that a director or executive becomes unable to perform his or her regular job duties and responsibilities. Many companies take out this cover to protect their business and employees, realising that it is important to plan for unexpected events and ensure that they do not cause financial difficulties to the business.
Do You Need Income Protection?
Company directors are normally extremely highly skilled and have unique responsibilities that are not easy for anyone to fulfill. If they should find themselves unable to work due to illness or accident, their loss can have a significant impact on a business and may cause lasting problems into the future.
Company directors' protection cover helps by providing a monthly benefit that can be used to cover the director's salary. While the other regular employees may also have protection, company directors' income protection is aimed at the more senior members of the company who are likely to have the highest wages and so the cost of replacing them will be higher.
Types Of Income Protection
- Option one is to provide cover for a director, which is taken out by the company and the payment received from the plan would go direct to the company. The company would then pay the director using the money received. Generally the payout is up to 70% of the executive's monthly salary.
- The second option is for the money received from the plan to go to the company and used to pay for a suitable replacement whilst the existing director is unable to work. This can help save the company money, as finding a stand-in company director can prove costly.
Another benefit to company director's protection cover is that it is considered a business expense. As such, the premiums are deductible as a legitimate business expense and in many cases the policy may cover a higher percentage of the director's salary. Many businesses offer their employees company income protection as part of their benefits package.
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