Executive Income Protection Plan

How does the policy work?

• You select how much benefit you need and for how long.
• Cover can be up to a maximum of 75% of your gross earnings, including Dividend payments.
• Benefits are taxable, but do not incur benefit in kind payments

There are a range of options to make sure that you get the policy that's right for you.

• Own Occupation Cover
• Dividends included as income
• Options to have increasing benefits to keep pace with inflation
• 2,3,5, years or cover and up to retirement
• Guaranteed or Reviewable premiums

Glossary

Income replacement policies (PHI) might appear similar but they can vary considerably, and it is essential to get the right cover for you which certainly does not mean simply getting the cheapest policy. There are a few key issues which are essential to selecting the right policy and these are laid out below.

If you already have a policy we can provide the benchmarks to make sure that you have the right level of cover.

Own Occupation?

This is a very important starting point. There are two types of policy as far as occupation is concerned. Own Occupation policies cover you against being unable to do your job. Any Occupation policies provide cover if you can't do any job. As you would imagine Any Occupation policies are cheaper, but could be completely inappropriate for people doing work that requires skill and experience.

Guaranteed or Reviewable?

This concerns the amount of premium you pay for a policy. If you select premiums which are Guaranteed it means that the premium will not increase unless you choose to increase the amount of cover that you have, and the Insurer guarantees that it won't increase. If you select Reviewable then the Insurer can increase (or they would say potentially decrease) the premium that you pay at their discretion, so if there is a bad year for claims, for example, then the Insurer might well increase the premiums should they choose.

Level or Increasing Benefit?

Basically you can either make your cover inflation proof or not. Whilst it is cheaper to select Level term this means that if you make a claim your benefit will stay at the same amount over time. The amount of benefit that a policy holder might receive at the beginning of a claim could of course be worth considerably less over time if it does not keep pace with inflation. Selecting Increasing means that the cover is inflation proof.

Dividends covered?

If, as a Contractor, you take part of your income in dividends it is going to be important to ensure that the policy covers dividend payments as income. Some policies will only cover income that is paid as salary; other policies will take dividends into account when calculating the amount of income to be covered.

Personal or Executive cover?

You have the choice of how you pay for your policy and this is another issue for the Contractor to take into account. It is possible to pay for the cover personally from your net income, Personal Cover, in which case benefits paid are tax free. Alternatively you can apply for Executive Cover and pay for the premiums from the business account, in which case benefits enter the company tax free but then you pay tax and national insurance on any benefit that is drawn as income. If you choose to pay out of the company account you can insure up to 75% of income and the premium payment, although a business expense, is not a payment in kind benefit.

Waiting Period

This is the time before the benefit becomes payable in the event of a claim. This can be either: 4, 8, 13, 26, or 52 weeks. Choosing a longer waiting period reduced the cost of the premium, although there might not be a huge difference between 26 and 52 weeks.

NRD

This is your Normal Retirement Age up to which you can receive cover and, if selected, benefits, which is now up to age 70.

Medical Underwriting

Your application will include questions about your medical history, earnings and occupation and other personal circumstances. At the insurance companies expense they may ask for further medical information to support your application.

These policies are available on a direct offer basis. You will not receive advice or a recommendation from us. We may ask some questions to narrow down the selection of products that we will provide details on. You will then need to make your own choice about how to proceed. If you have any concerns about the suitability of this type of Insurance for your particular needs we suggest that you seek Advice.

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