For senior professionals, directors, and business owners, income is more than a payslip. It represents the foundation of personal financial stability, the fuel for family life, and in many cases, the resource that keeps a business itself running. The irony is that while high earners often manage complex financial strategies—balancing dividends, pensions, investments, and tax planning—they are frequently under-protected when it comes to the one thing that underpins it all: the ability to work and generate income.

This is where Executive Income Protection (EIP) steps in. Unlike conventional Income Protection, which pays benefits directly to an individual, EIP is arranged and paid for by the company. It’s specifically designed to protect directors, partners, and senior staff in the event of long-term illness or injury, replacing lost earnings through a structure that can be far more tax-efficient. In 2025, as financial pressures and healthcare challenges increase, this cover is moving from a niche option to an essential part of the protection conversation.

Why the Need Has Intensified

The financial landscape of 2025 is sharply different from just a few years ago. Households at all income levels have faced a squeeze from higher mortgage costs, rising energy bills, and the impact of inflation on everyday spending. For high earners, the perception is often that “they’ll be fine,” yet the reality is more nuanced. Larger commitments—bigger mortgages, school fees, lifestyle costs—mean that one missing paycheque can still destabilise a household.

The situation is even more pressing for directors who take the bulk of their earnings through dividends rather than salary. Statutory sick pay, or even a short burst of company sick pay, would barely register against their real take-home income. Without an alternative arrangement, a period of illness could quickly erode savings and create stress at exactly the time when focus should be on recovery.

Healthcare itself is another factor. Delays in accessing NHS treatment remain a concern, and while Private Medical Insurance can speed up diagnosis and surgery, treatment still takes time, and convalescence often extends for months. During that gap, bills keep arriving. Without income protection, executives can find themselves forced to return to work too quickly, or to dip into long-term investments that were never meant to be touched.

Finally, longevity means that the risk window is longer. With many professionals working into their late sixties, the chances of facing an illness or injury that interrupts income are higher. Executive Income Protection provides a safety net during that extended working life, ensuring resilience is maintained.

How Executive Income Protection Works

Executive Income Protection is structured differently from personal cover. The company, rather than the individual, pays the premium. If a claim arises, the benefit is paid to the business, which then continues to pay the insured executive as though their income had never been interrupted. This can include not just salary but also dividends, pension contributions, and other contractual benefits.

From a tax perspective, this structure is often more efficient. While advice is essential on the exact treatment in each case, many businesses can treat premiums as a legitimate expense. For directors used to navigating the balance between salary and dividend, this arrangement provides continuity without the need to restructure their income.

It is, in essence, a recognition that for many high earners, income is complex and multi-layered. Traditional policies may only replace a proportion of salary, leaving dividends and benefits uncovered. Executive Income Protection fills that gap, tailoring cover to reflect the real value of a remuneration package.

The Human Impact

Consider a director of a small consultancy firm who draws £15,000 a year as salary and £60,000 as dividends. If she were to fall ill and be unable to work, statutory sick pay would barely replace a fraction of her income. Even if the company continued to pay her salary for a period, the loss of dividend income would be profound. Over six months, that could represent a shortfall of £30,000 or more—an amount that could quickly dismantle savings or force the liquidation of investments.

With Executive Income Protection, her business could continue to provide her full package, ensuring not only her personal stability but also the stability of the company itself. Her mortgage payments, family expenses, and pension contributions would continue, allowing her to focus entirely on recovery.

This isn’t about luxury or preserving lifestyle extras. It’s about maintaining dignity and continuity in the face of adversity. The psychological benefit of knowing that bills will be paid and commitments honoured should not be underestimated.

How It Complements Other Cover

One of the mistakes many professionals make is viewing protection products in isolation. In reality, the most resilient strategies are layered. Business Protection ensures the company itself can weather shocks. Key Person Insurance protects against the loss of critical staff. Relevant Life Insurance provides a tax-efficient life cover benefit. Executive Income Protection sits alongside these, focusing not on death or corporate survival, but on maintaining personal financial flow when illness interrupts work.

When combined, these products create a comprehensive framework of resilience: the business is stable, key individuals are protected, and personal finances remain uninterrupted. For senior leaders, that is not just desirable but increasingly essential.

Considerations and Challenges

No protection product is perfect, and Executive Income Protection requires careful tailoring. Premiums will naturally be higher for larger benefit levels, and insurers often impose caps on the total amount payable. The definition of incapacity varies between providers—some focusing on “own occupation” criteria, others applying stricter tests. Deferred periods also influence premiums; the longer you are prepared to wait before benefits begin, the lower the cost.

Inflation is another subtle challenge. A policy that provides £75,000 today will not carry the same weight in 15 years’ time. Many providers allow policies to be index-linked, ensuring benefits rise each year in line with inflation. Deciding whether to adopt this feature is a critical conversation.

These complexities make professional advice indispensable. The wrong choice of deferred period, benefit limit, or incapacity definition could result in paying premiums for a policy that doesn’t deliver at the crucial moment.

How Willow Can Help

At Willow Private Finance, we specialise in designing protection strategies for directors, executives, and high earners who need more than an off-the-shelf solution. Because we work with the whole of the market, we can compare providers not just on price but on the fine details of their policies—waiting periods, claim definitions, inflation options, and tax treatment.

We start by mapping out your real income structure: how much comes from salary, how much from dividends, what level of pension contribution you’re making, and what other benefits form part of your package. From there, we can recommend a policy that reflects your actual financial footprint rather than a simplified version of it.

Equally important, we ensure Executive Income Protection sits in harmony with other products. If you already have Relevant Life Insurance or Business Loan Protection, we will check for overlap or gaps, so that every premium you pay is working to secure a different piece of the puzzle.

Our role is not just to recommend cover, but to simplify complexity. By the end of our process, you’ll know exactly what is protected, how it is protected, and why it matters.

Ready to Secure Your Income?

The truth is that illness or injury does not discriminate. It affects directors and professionals just as readily as anyone else. The difference is that without protection, the impact can be even greater, because so much depends on your ability to keep earning.

Executive Income Protection provides the assurance that, should the unexpected happen, your income will not disappear overnight. It allows you to recover with dignity, your family to continue without disruption, and your business to maintain stability.

If you’re ready to explore how this could work for you, Willow Private Finance is here to guide you through the options, ensuring clarity, efficiency, and peace of mind.