What is Company Director Sickness Insurance?
If you are a director of a limited company, company director sickness insurance from Black Lion Insurance (also known as company director income protection) could offer the safety net you need in difficult times.
How would the sudden loss of your income due to a serious illness or an injury impact you, or those you love? Would you have enough savings to keep a roof above your head and pay the bills?
First things first.
Perhaps you’ve not heard of director income protection. If not, and in the hope that you’ll never need it, here at Black Lion Insurance it will be our great pleasure to enlighten you. And, to offer you advice on the right option for your needs, of course.
What is Company Director Sickness Insurance? How does it differ from standard income protection?
Essentially, as a director, it’s your company rather than you personally who will pay the premiums for this specialist cover. In other words, it IS similar to “normal” accident and sickness insurance but with a big difference:
In both cases, the beneficiary is you, but with company director sickness insurance, the business provides the funds, rather than your personal bank account. The money is given to the company and then paid out directly to you. Fundamentally, the policy belongs to the business. However, do be aware that it will be subject to tax and national insurance.
(Incidentally, some smaller organisations offer director sickness insurance to senior level executives as a part of their remuneration package)
Company Director Sickness Insurance – Things to know and think about
Firstly, you’ll need to consider the length of the policy. Secondly, you’ll need to offer accurate information on the current state of your health.
Another point to note is that if you are actively contributing to the success of the business and your earnings include dividend payments, you may be able to insure up to 80% of your gross salary and dividends. Sounds good? Yes, indeed it does.
Not sure? No problem.
In our opinion, it’s best to talk to our team of financial advisers if you have any questions. Contact us today. We’re here to help. To explain, our specialist advisers can straighten out in your mind any questions you may have about the differences between policy insurance types.
Do I need Company Director Sickness Insurance?
None of us know what’s around the corner. Often, quite literally. You may be in rude health. Obviously, you and your family benefit from the income your skills generate. And hopefully, your lifestyle is worry-free.
But it may not always be so.
Here at Black Lion Insurance, we hope that you will never need to claim on your director income protection insurance. However, you don’t need insurance until you need it. Then, you need it. For example, you could really need it if you’re seriously ill, or in a car accident.
Remember Own Occupation Cover.
We’d be happy to advise you about this important distinction. If you’re a director, own occupation cover is your fall-back. Why? Because it stipulates that you can no longer carry out your specific profession or skill within the business – rather than any competency or job role.
Why Black Lion Insurance?
The answer is simple. Basically, we’re insurance experts first, second and third. We don’t sell. Actually, we can’t sell. Nobody here is a sales person. How so? Obvious, really. You’d probably cancel your policy the next day! No, we offer outstanding advice that educates and supports your needs. In short, we’re holistic, whole of market advisers with your best interests at heart.
Director income protection is a specialist type of cover, so it’s important for you (and for your business) to make the best decision. Contact us for more information.
What are the different types cover?
Are you a sole trader?
When taking out a self-employed income protection insurance plan as a sole trader, you will be taking out a personal plan.
Essentially, this covers up to 65% of your gross income and is exempt from income tax and national insurance. Your monthly insurance income is based on your personal earnings, rather than the revenue from your business. Therefore, your benefit will be paid directly into your personal bank account. Therefore, you can’t claim any business expenses as part of your policy.
For limited company directors or contractors:
If you are the director of a limited company, you have 2 choices when it comes to your self-employed income protection policy. You can either, take out a personal plan, like for sole-traders, covering up to 65% of your gross income.
Or, you can choose a Director Income Protection Plan. in this case, it is paid by your business and covers up to 80% of gross income and company dividends. The monthly insurance income is paid directly to the business and then in turn to you, via your business bank account.
Therefore, this option means that you will incur income tax and national insurance rates. To clarify, there are various insurance policy options that you will need to decide on.
Read our income insurance protection options section for clarification.
What is ‘own occupation’ income protection insurance and why is it important?
We recommend that policy holders take out an own occupation policy. To all intents and purposes, this means that the insurers will pay out for any medical reason that means you cannot do your specific job. There are other definitions that may not pay out if they believe you could still do another job, which is not the case with own occupation cover, it will pay out if you can’t do your specific job.
How does a director income protection insurance policy work?
You develop and injury illness that means you are unable to work.
You contact your insurer to make a claim. You will need to complete the necessary forms as well as provide a letter from your GP or medical professional.
As soon as your deferred period ends, you will receive your monthly insurance income, made payable either to your personal or business bank account, depending on your chosen policy.
You will continue to receive your income in accordance to your policy and can claim until your policy expires or you reach retirement age.
Accident and Sickness Insurance
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We are a dedicated team of financial advisers, with years of experience in guiding our clients to a solution that meets their specific needs. We specialise in helping both employed and self employed individuals, as well as business owners on a variety of solutions, which range from life insurance, income protection insurance, keyman insurance and shareholder protection insurance.
The guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.