Safety First : Executive Income Protection


Business was never a bed of roses and modern day business activities takes the difficulty bar a notch higher. With the increase in quantum of trade activities and relations around the world, business these days has become increasingly vulnerable to fluctuations happening in its internal as well as external environment.

One of the striking features of modern day businesses is the dependency on human resource. Human resource is the backbone of any enterprise these days. It includes both physical as well as mental labour. Since, manpower is such an indispensable part of any organization therefore the employers too are keen on retaining the employees for a long time.

Executive income protection is a risk cover chosen by the employer that is intended atproviding some selected employees the perquisites of an extended sick pay arrangement. In layman’s terms it would mean that in case any employee of a company who occupies a strategic position in the company falls ill or meets with an accident due to which his productive capacity is hampered for a certain period of time, the insurer would pay a regular monthly benefit to such an employee as part of the plan so that the employee does not suffer from any financial constraints during this period.

Risk cover

Executive income protection plans provide risk cover for salary as well as dividends of the employee. The reason for this is that such plans are usually taken for the employees who occupy influential positions in the company and such employees earn a major part of their income in the form of dividends received on shares of the company. These mainly include the owners and executives of the company. Hence, a good risk coverplan must provide the benefits of PAYE (Pay as you earn) salary as well as dividends.


The working of the plan is quite easy to understand. The insured files a claim with the insurer if he meets with an accident or falls ill. The claim can be filed by submitting the following documents with the insurer:

  • Medical certificate from the policyholder’s doctor
  • Completed claim forms

After fulfilling the above formalities the insurer starts paying a fixed sum of money to the insured which continue until the policyholder recovers fully or exceed the duration of claim or leave the company or retire, whichever is earlier.

Executive income protection plans can cover up to 80% of the total income of the employees. Hence, such plans serve as an excellent tool for manpower retention along with boosting the morale of the employees.