Executive Income Protection
A smarter way to protect your business and your people
Executive Income Protection is a powerful financial tool designed to protect your most valuable asset: your people. Whether you're a director, contractor, or small business owner, this insurance ensures income continuity during periods of long-term illness or injury.
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What is Executive Income Protection?
Executive Income Protection insurance is a policy paid for by the employer that covers an employee’s income if they’re unable to work due to sickness or injury.
It protects not just their salary, but also dividends, P11D benefits, and, where selected, employer pension and National Insurance contributions. This policy is particularly valuable for company directors, key employees, and contractors who are typically remunerated in diverse ways.
Benefits of Executive Income Protection
1. Tax-efficient
Premiums are usually classed as business expenses (not P11D benefits).
2. PAYE-compliant payouts
Benefits are paid through payroll and taxed like salary.
3. Tailored for directors and contractors
Cover salary and dividends in one plan.
4. Flexible and comprehensive
Suitable for every size of business—from micro to mid-market.
Looking for cheap Executive Income Protection that still meets your business needs? Speak to us for Executive Income Protection quotes that fit your budget and strategy.
How does Executive Income Protection Work?
- Policy Setup: The business takes out an Executive Income Protection policy on behalf of the employee.
- Coverage Begins: Earnings, including salary and dividends, are protected.
- Incapacity Event: If the employee becomes ill or injured and cannot work, a claim is made.
- Payouts Begin: After the deferred period, monthly payments start and continue through the benefit period, or until the employee returns to work or retires.
- Policy Continuation: Employees leaving the business can transfer the cover to a new employer through a continuation option.
Executive Income Protection in the UK is particularly suitable for:
- Company directors and SMEs
- Key employees critical to operations
- Contractors with irregular income
- Small business owners looking for cost-efficient cover
- Any business seeking tax-deductible, strategic employee benefits
- Salary
- Dividends
- Overtime & Bonuses
- P11D benefits
- Spousal or partner dividends lost due to incapacity
- Employer pension and NI contributions (optional)
- Up to 80% of annual earnings, capped at £300,000 (level benefits) or £210,000 (indexed).
- Employer pension contributions: up to £40,000.
- Employer NI contributions: up to £42,500.
Your Broadbench adviser with use an Executive Income Protection calculator to explore your benefit level.
Key Features and Options
Own occupation cover
Payments are based on the inability to perform your specific job role.
Indexation
Keep benefits aligned with inflation.
Deferred periods
Choose between 4, 8, 13, 26, or 52 weeks.
Benefit periods
Limited-term or full cover to retirement (ages 50–70).
Guaranteed premiums
Lock in cost stability over time.
Waiver of premium
No premiums due during a valid claim.
Pension contribution support
Optional, to maintain retirement plans.
Rehabilitation support
Return-to-work programmes help aid recovery.
Proportionate benefits
Support when returning on reduced hours or salary.
Feature | Executive Cover | Personal Cover |
Paid by | Employer | Individual |
Tax deductible | Usually, for the business | No |
Taxed benefit | Yes (PAYE) | No (individual responsibility) |
Dividend cover | ✅ Yes | ❌ No |
P11D benefit status | ❌ Usually not a benefit in kind | N/A |
For directors paid through a combination of salary and dividends, Executive Income Protection for directors offers more robust and tax-smart coverage than a personal policy.
Please note: This content is based on our understanding of UK tax laws as of 2025. Tax treatment may change. Always consult a qualified Broadbench advisor for personalised advice.
In 2024, UK insurers paid out £7.34 billion in protection claims, highlighting both the rising need and the value of cover. Despite this, only 14% of adults in the UK have income protection. Now is the time to safeguard your business and your people.
The Business Case
Executive Income Protection for SMEs and growing companies is more than a benefit; it’s a strategy. By offering this protection, you:
- Improve staff retention
- Demonstrate commitment to employee well-being
- Support long-term business continuity
- Enhance your reputation as a caring, forward-thinking employer
Let’s Build Your Protection Plan
Our specialists will work with you to design a bespoke Executive Income Protection policy. Whether you need cover for a single key employee, your entire leadership team, or a portfolio of contractors, we’ll help you get the protection you need at the right cost.
Speak to a dedicated advisor for Executive Income Protection quotes that fit your team and budget.
How Much Does Executive Income Protection Cost?
The Executive Income Protection cost depends on factors such as:
- Age and health of the insured
- Chosen deferred and benefit periods
- Occupation risk level
- Benefit amount and whether it includes dividends and pension cover
- Indexation and premium type (guaranteed vs reviewable)
Get in touch for custom Executive Income Protection quotes tailored to your team’s unique profile.
Tax Facts
1. Premiums Can Be Tax-Deductible for the Business
When a company pays the premiums for an executive income protection policy, those premiums are generally classed as an allowable business expense. That means the business can usually claim corporation tax relief on the cost, reducing its taxable profits. The premiums are not normally treated as a benefit-in-kind (P11D) for the individual executive, so there’s no extra personal tax charge on having the cover.
2. Benefits Are Taxed When Paid as Income
If the policy pays out because the executive is unable to work due to illness or injury, the insurer typically pays the benefit to the business first. When the business then pays that benefit to the executive through the payroll, it will normally be subject to income tax and National Insurance contributions in the usual way, just like salary.
3. No Benefit in Kind
Executive income protection is usually not treated as a benefit-in-kind, meaning it doesn’t attract personal tax on the premiums themselves, provided it’s structured correctly and meets HMRC rules.
All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs’ practice. Levels and bases of tax relief are subject to change.
FAQs
How does Executive Income Protection work?
Executive Income Protection (EIP) covers an employee’s sick pay if they are unable to work due to illness or injury. The benefit is paid to the company, which then passes it on to the employee, with tax applied at that stage.
Who is the owner of an Executive Income Protection (EIP) Plan?
The policy is owned and funded by the business, not the insured individual.
How long does income protection last?
You can choose the policy duration, but it cannot extend beyond your retirement age.
What is short-term income protection?
A short-term income protection plan provides coverage for a portion of your income if you’re unable to work due to illness or injury, typically for up to 12 or 24 months per claim.
What is long-term income protection?
A long-term policy covers a portion of your income until you either return to work or the policy expires. Most plans offer coverage up to retirement age.
What is a deferral period?
The deferral period is the waiting time between becoming ill or injured and when you can start claiming benefits. Shorter deferral periods increase the cost of the policy.
For example, if you have three months of sick pay and savings to cover two additional months, a five-month deferral period may be suitable.
What is "waiver of premium"?
Waiver of premium is a feature that covers your insurance payments while you’re claiming benefits. This is typically included as standard with executive income protection.
Ready to secure the cover that’s right for you?
Fill out the form below to arrange a time to speak to a Executive Income Protection expert.