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Income Protection

When deciding what form of company directors income protection you want to take out, it is important to decide on what you want to cover. Option one is to provide cover for the director, directly. This would be taken out by the company for whom he works and the payment received from the plan would go direct to the company. The company would then pay the director using the money received. If the directors insurance is taken this way it enables you to get more cover. This is often up to 70% of earnings. The second option is for the money received from the plan to go to the company direct and the money received from the plan is used by the company to pay for a suitable replacement whilst the existing director is unable to work. This can help save the company a lot of money as often finding a stand in company director can prove costly as they will need to be very highly skilled and costly to the business.

Many companies will take out a company directors income protection plan to protect their business and employees. These companies realise that it is important to plan and prepare for unexpected events and ensure that they do not have a detrimental impact on their business. Company Income Protection Insurance policies can help prevent these unexpected events or occurrences from causing financial problems and difficulties to the business. You could take property or buildings and contents insurance that can protect a business if it suffers a fire or other disaster that disrupts the normal flow of the business and can require extra costs. So why not also cover its most important asset, its leading members of staff. Company directors income protection insurance and executive income protection insurance does the same thing, in this case protecting the business in the event that a director is ill or is involved an accident and unable to perform their regular job duties and responsibilities.

Executive Income Protection,   Directors Income Protection Insurance, Executive Income Protection Insurance

Company directors are normally extremely highly skilled and have unique responsibilities that are not very easy for just anyone to fulfil. If they should find themselves unable to work due to illness or accident their loss can have a very negative effect on a business and may even cause permanent problems for them going into the future. Company director’s 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 in the majority of cases aimed at the more senior members of the company. The senior members of staff are likely to have the largest wages and the best benefits within the business. As they will be missing from the business, the business is likely to have to bring a replacement in to cover and this is likely to cost the company a lot of money.

Company director’s income protection insurance is often set up to pay up to a percentage of the employee’s monthly income. This lets the business pay the employee without taking funds from other areas of the budget. In this way they can maintain regular business practices. 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. This type of insurance will provide a regular income if an employee is unable to work. This can be due to employee becoming ill or suffers an accident.  People who are interested in getting a policy to protect their income are usually advised to check with their employer first, as a lot of employers will offer some form of protection for them. This however is not normally very comprehensive and will not cover for long periods of time.  You will often find a directors income protection plan will cover for a long term basis and provide the director with cover should he be unable to work due to illness or incapacity.

The premise behind company director’s income protection is to provide a regular monthly benefit to make up for the loss in income should you be unable to work and as a result of being unable to work suffering from a loss of earnings.  The insurance is designed to replace these lost earnings and enable the individual covered to meet their liabilities. The actual amount of the cover that is taken in the plan is decided by the individual, however they must take into consideration that normal deductions such as tax and national insurance contributions are taken by the employer, but are not deducted from the money received from the income protection insurance. If you work the figures out, the deductions you will have on your normal earnings should mean that the income protection should not be more than half of your normal wages. It is also worth mentioning that the majority of income protection plans will not normally provide you with more that half of your earnings although some may go up to 65% in some circumstances.

Many company income protection insurance plans benefit the employees and many also provide benefits for the business. Most illnesses and accidents are unpredictable. Suddenly losing an employee could have a very damaging effect on a business and its finances. The company is usually committed to paying the employee some wages while they are off of work, and they may also need to hire and train a replacement worker.
Some of these company income protection cover plans provide funds to the company to compensate for these costs. In this way the company is protected from unexpected expenses so they are able to carry on with their business activities. And the employee who is unable to work is also receiving a regular income. Both the business and the workers are protected financially in the event of an accident or illness. And this benefit is a good way to attract quality people to the company.

Income protection insurance can be an important form of protection in any employee’s financial portfolio, there are many policies out there in the market that can help provide cover should you be unfortunate to suffer from something that will stop your from working. In the event of sudden unemployment due to illness or accident this kind of policy can help pay bills and other expenses. Executive income protection and company director income protection insurance are similar but are more for the protection of the business than for the individual worker. It can protect the company when a key employee is unable to work because of an illness or accident. 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. Executive income protection insurance is taken out by the business on these key employees. It is generally considered a business expense and this is how it is usually budgeted.
When these employees are suddenly taken ill or have an accident that prevents them from working, their contracts or agreements usually ensures that they are going to continue to receive their pay check. This can sometimes be full pay for a set number of months or even longer. Executive income protection cover can pay the benefit directly to the company to cover this salary. Generally the payout is up to seventy percent of the executive’s monthly salary.

This insurance benefit may be the difference between staying in business and being forced out by budget constraints. This is why executive income protection is more a business insurance policy rather than an individual policy. A company who loses the services of a key executive is still going to need that work done, so they will probably need to go out and employ a stand in to handle the executive’s responsibilities. Executive income protection insurance helps the business recoup part of that salary so they have the funds to pay another salary.

Most businesses are in a constant state of planning and preparing for the future. While they can’t predict events they can use protective strategies like executive income protection cover to ensure that their key people will get paid and that the business will not suffer a devastating financial hit.