executive income protection
tax deductible income protection?
Large companies often provide their staff with benefits packages that include insurance such as income protection. As an SME, it may not be possible to offer a group income protection because the company is not big enough or the group of employees your client wants to support is relatively small.
This is where an Executive Income Protection policy comes in. An Executive Income Protection policy acts as an individual income protection policy but is owned and paid by the business. Not only does this cover the individual’s income, but also NI and pension contributions can continue, meaning that that retirement goal is still within reach.
What’s more is it is tax deductible!
why do income protection through the company?
The first reason is clear, it is tax deductible. This means that instead of paying premiums from earned income i.e., money which is subject to both corporation tax and income/dividend tax, the premiums can be deducted from corporation profit. This can mean the premiums are up to 50% cheaper in real terms.
The second reason is that your client may wish to provide their best talent with a work placed benefit that can help with retention. Your client’s people are their business. Protecting them shows they care and have their best interests at heart.
A third reason, and one that is often neglected, is that out of the proceeds, NI and pension contributions can continue to be made. This is beneficial to those who have a retirement date in mind as the pot can continue to grow even whilst off sick.