Executive income protection and Relevant Life: smarter cover for company directors
Directors optimise everything else for tax, then often buy protection that ignores how they actually pay themselves. That is finally changing.
The classic director mistake is buying cover based on a small PAYE salary while the dividends that make up most of the income go unprotected. On paper they are insured; in reality they are badly under-covered. The fix has been around for years but is only now becoming mainstream knowledge.
Executive Income Protection is taken out and paid for by the company. It can cover salary and dividends, often a higher proportion of income than a personal plan, and the premium is usually an allowable business expense. Relevant Life sits alongside it as company-paid life cover for an individual director — normally not a benefit-in-kind and frequently cheaper overall than buying personally.
Neither is complicated, but both sit where protection meets company tax planning, so they work best arranged with input from your accountant.
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