emero » Income Protection Insurance » Executive Income Protection
Executive Income Protection
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What is Executive Income Protection?
Executive Income Protection provides an income for executives and key employees should they be unable to work due to illness or injury.
This regular income will start after an agreed deferred period has elapsed. The executive or key employee must be unable to perform their normal duties and not be undertaking any other occupation.
The purpose of Executive Income Protection is to provide a regular income in the event of a claim. There is no surrender value payable at any stage of the policy.
How emero can help you get Executive Income Protection
We can help you get covered in 3 easy steps.
1.
Calculate the cover required
Calculating the appropriate level of cover needed for your situation is the first step. A quick assessment will allow us to assess your situation and determine the correct cover you will need.
2.
Search the market
At emero, we hold agencies of all of Ireland’s largest life insurance companies. This gives us the ability to compare the entire market and allows you to ensure you get the best possible quote.
3.
Protect your Income
The final step is to put cover in place and ensure that your income is protected. From here our team will liaise with you and move through the final steps before receiving your documentation.
1.
Calculate the cover required
Calculating the appropriate level of cover needed for your situation is the first step. A quick assessment will allow us to assess your situation and determine the correct cover you will need.
2.
Search the market
At emero, we hold agencies of all of Ireland’s largest life insurance companies. This gives us the ability to compare the entire market and allows you to ensure you get the best possible quote.
3.
Protect your Income
The final step is to put cover in place and ensure that your income is protected. From here our team will liaise with you and move through the final steps before receiving your documentation.
Professions where Executive Income Protection is most popular
Income Protection Insurance is becoming more and more popular in a wide range of sectors, industries, and professionals.
Advantages of Executive Income Protection for Employers
As an employer offering Executive Income Protection to your employees, you are likely to enjoy long-term benefits.
As Executive Income Protection is a perk, it is likely your employees will be more content in their role and therefore more productive. Statistics show that happy employees are on average 12% more productive.
Other more pronounced benefits for an employer will include:
- Reduce the potential cost of sick leave among employees
- Attract and retain high calibre employees
- Improve employee morale
- Increased employee loyalty
- Premiums may qualify as a deductible expense for tax purposes
Looking to learn more?
Find out more about the benefits of Executive Income Protection for employers. Learn More
Advantages of Executive Income Protection for Employees
In most cases, an employee’s income is likely their most important asset. Without an income, rent, mortgage, or basic living expenses may become a struggle.
Some of the benefits for employees are:
- Peace of mind knowing they will have a percentage of their income even if unable to work due to illness or injury
- Premiums may be paid by the employer
- If unable to work, benefits are paid for the full duration of the agreed policy term
Creating employee loyalty among staff is key for the long-term success of any business. Having benefits such as Executive Income Protection helps retain staff and boost morale.
High staff turnover can also be costly to a business. Recent studies estimate that it costs approximately €13,100 to replace a staff member when training, recruiting and all other aspects are accounted for.
Looking to learn more?
Find out more about the benefits of Executive Income Protection for employees. Learn More
Did you know?
Income Protection policies are eligible for tax-relief
Therefore, a €150 premium per month would in real terms cost €90. This means you can protect your income for as little as €22.50 per week.
The above is based on an individual in the 40% income tax bracket.
At emero, we pride ourselves on educating our clients.
Below we have outlined different aspects of Income Protection that should be considered in more detail.
Editorial Staff
Last Update: August 2022
An Executive Income Protection policy allows directors and key employees to protect their income. The premiums will be paid through the company and in the event of a claim, the benefit is paid to the company.
From here, it will be passed to the relevant employee through the payroll where all the usual tax implications will be applied.
What should I consider when choosing my Executive Income Protection policy?
When choosing an Executive Income Protection policy, there will be decisions. As with any policy, the level of cover and policy will be particularly important.
Level of cover
With Executive Income Protection, you have the option to cover up to 75% of your salary. When deciding on the level of cover you will need to consider rent/mortgage, day-to-day, and general living expenses.
It is also important to consider any other insurance policies that may be in place. In most cases, it may be sufficient to cover 60% of your salary.
Although it is worth noting that the amount of cover needed will depend on your specific situation. Below we look at an example.
In this example, Company A is ensuring one of their key employees earns €90,000 per year. They also qualify for the full State Illness Benefit.
Salary | €90,000 |
Percentage Insured | 60% |
Total claim per year | €54,000 |
Plus State Illness Benefits | €10,816 |
Total Claim | €64,816 |
Having this Executive Income Protection policy in place meant this employee was entitled to €64,556 including the State Illness Benefit.
In other circumstances, usually after a brief ‘sick-pay’ period, they would be forced to depend solely on the State Illness Benefit of €208 per week.
Deferred period
The deferred period is another important consideration when choosing your Executive Income Protection policy.
The deferred period is the amount of time you have to be unable to work continuously due to illness or injury before your Income Protection benefits begin to be paid. These deferred periods run from 4,8,13,26 and 52 weeks.
When deciding what deferred period would be most suitable, often it will depend on how much sick leave the employer offers.
Ideally, you will try to arrange your deferred period to begin as your sick-leave payments come to an end. This will differ depending on your personal circumstance.
The deferred period you choose will have an impact on your premiums. The shorter the deferred period the higher your premiums.
Figure 1: Explaining different deferred (waiting) periods before Income Protection begins
Policy Term
At the outset of your Executive Income Protection policy, you will choose the end date of the policy.
This is the age at which the cover will cease. In most cases, you will select any age between 55 and 70. Often the age you choose will align with the retirement age in your contract.
It is worth discussing with your Financial Broker what policy term may be most suitable.
Occupation Classes
A major factor when assessing eligibility for Executive Income Protection is the occupation of the beneficiary. Some occupations are considered higher risk and therefore, will pay a higher premium.
Whereas IT Consultants are considered a Class 1 occupation, an electrician would be Class 4, meaning they are considered higher risk. This is because they have a higher chance of suffering an accident at work compared to an IT Consultant.
Below we look at an overview of the occupational classes.
Class 1 – Occupations with a low risk of an accident.
Class 2 – Occupations involving minimal manual labour.
Class 3 – Skilled occupations involving light manual labour.
Class 4 – Skilled tradespeople and manual occupations.
Class | Occupational example |
1 | Accountant, solicitor, IT Consultant, Pharmacist. |
2 | Dentist, Photographer, Hairdresser, Journalist. |
3 | Chef, Teacher, Nurse, Tattooist. |
4 | Plumber, Electrician, Publican, Farmer. |
Other occupations such as cabin crew, fisherman, and fitness instructors will be declined automatically.
If you are unsure what category you may fall under, feel free to contact our team for assistance.
It is worth noting that if applying for Executive Income Protection, any pre-existing conditions may be excluded. If pre-existing conditions are not excluded, an additional premium may be applied.
What does Executive Income Protection cover?
Executive Income Protection provides you with an income should you be unable to work due to illness or injury.
Figure 1: Explaining what Income Protection Covers
It is worth pointing out that an Executive Income Protection policy will pay out the beneficiary once they are unable to work due to illness or injury. Unlike a Specified Serious Illness policy, any and all illnesses will fall under Executive Income Protection.