Your company keeps paying your salary — even when you can't.
Executive Income Protection protects your income if illness or injury stops you working. The company pays the premium — as a business cost, free of tax and National Insurance on the cover itself.
Stonebridge Awards — Winner 2025 & 2026
Protection level covering salary and dividends under EIP.
Illustrative example. EIP covers a higher % of income, but the benefit runs through payroll and is taxed — see the section below.
Executive Income Protection (EIP) is a policy taken out and paid for by a company, protecting a director's or key employee's income against long-term illness or injury. The claim goes first to the company, which continues paying your salary through standard payroll — instead of your income stopping at the worst possible moment.
Why LTD directors choose EIP
Higher level of cover
Personal policies typically cover 60–65% of income. EIP can protect up to 80% of salary and dividends combined.
An allowable business expense
The premium can reduce your Corporation Tax bill, provided it meets the "wholly and exclusively" test.
No tax on the premium
The premium itself isn't a benefit in kind — it doesn't appear on a P11D and creates no NI or tax charge for you.
Protects company cash flow
The claim is paid to the company — it can cover your salary and the cost of cover, rather than income simply stopping.
Covers dividends
The policy is built around a director's full remuneration structure — not just basic salary.
Flexible waiting period
Deferred periods from 4 to 52 weeks — matched to your finances and premium budget.
A higher % of income than a personal policy.
A standard personal policy typically covers 60–65% of income. EIP, by taking into account a director's full remuneration structure — including dividends — can protect up to 80%.
Ask for a personal calculationIllustrative range, dependent on insurer and remuneration structure
How the benefit is taxed
Unlike a Relevant Life Plan, an EIP payout isn't tax-free — and we'd rather say that plainly than let a website gloss over it.
The premium the company pays isn't taxed and doesn't create a National Insurance charge. But when a claim is paid, the benefit goes first to the company as trading income, and the company passes it to you through standard payroll — so income tax and NI apply, just as they would on ordinary salary.
In practice: you pay no tax simply for having the cover, and the cost of that cover sits with the company before tax — rather than with you, from income you've already been taxed on.
Is EIP right for you?
Ideal for
- LTD directors whose income combines salary and dividends
- Companies too small for a group income protection scheme
- Key employees whose absence would significantly affect the business
Worth considering instead of
- A small group scheme, if your team is very small
- A personal policy, if you want dividends covered too
- Having no income protection for the director at all
Not marketing. HMRC rules.
The tax treatment of EIP comes directly from HMRC guidance — not from an insurer's interpretation.
The "Anderson" rules governing deductibility of premiums for insuring key people in a business — the basis for treating EIP as a cost.
gov.uk/hmrc-internal-manualsThe "wholly and exclusively" test as it applies to controlling directors and shareholders — determines Corporation Tax deductibility.
gov.uk/hmrc-internal-manualsWe don't provide tax advice. Final qualification depends on individual circumstances — we recommend checking with your accountant before making a decision.
How it works — step by step
Free consultation
We look at your remuneration structure — salary, dividends, bonuses.
Choose benefit level and deferred period
We work out what percentage of income to protect and how soon the benefit should start.
Application and underwriting
We guide you through the application process with your chosen insurer (LV=, Legal & General, and others).
Cover in place
You receive the full policy documentation — ready to hand to your accountant.
Frequently asked questions
Ready to map out your strategy?
Get in touch with our specialist advisers to discuss your remuneration structure and get a tailored calculation for your limited company.