Private Sick Pay

For Company Directors

Daddy Insurance Private Sick Pay (Income Protection) for Company Directors: A Vital Financial Safety Net 

As a company director, you’re likely very aware of the unpredictable nature of business. While you may have plans in place to protect your business, many directors overlook the need for personal financial protection in case of sickness or injury. This is where private sick pay, also known as income protection insurance, becomes a critical safeguard for both your financial well-being and the continued success of your business. The monthly benefit can include your salary and or dividends. In other words whatever you draw as personal income from the company.  

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What is Daddy Insurance Private Sick Pay Income Protection for Company Directors? 

Daddy Insurance Private Sick Pay Income protection insurance for company directors replaces a portion of your income if you’re unable to work due to sickness or injury. Unlike statutory sick pay (SSP), which offers minimal financial relief, a private sick pay policy can provide up to 70% of your regular income, helping to cover personal and business expenses during your recovery period.  

For company directors, this is particularly important, as many do not have the luxury of a company-funded sick pay policy. Company Directors are often excluded from employee benefits, or, in the case of small and medium enterprises (SMEs), the company may lack the resources to offer robust employee benefits. 

How Does Daddy Insurance Private Sick Pay Income Protection Work for Company Directors? 

Income protection insurance is flexible and can be customized according to your specific needs as a company director. Here’s how it typically works: 

Income protection insurance offers flexible and customizable coverage to suit your needs. Here’s how it typically works: 

• Coverage Percentage: Policies generally cover up to 70% of your income. For directors, this can include both salary and dividends, ensuring comprehensive income protection. 

• Deferred Period: This is the waiting period before the insurance starts paying out after you stop working due to illness or injury. For company directors, a deferred period can range from a week to several months. The longer the deferred period, the lower the premium. Directors can opt for a period that fits their financial safety buffer and desires.  

• Payment Term: The duration for which benefits are paid out can be specified, ranging from a few years to until retirement age, depending on the policy and your needs. 

• Tax-Free Pay outs: In most cases, the monthly benefit is paid out by is tax-free, providing further financial relief during a difficult time. 

Why is Daddy Insurance Private Sick Pay Income Protection Crucial for Company Directors? 

• Limited Access to State Benefits: Many company directors pay themselves a minimal salary, with most of their income drawn from dividends. This makes them ineligible for significant state benefits like SSP or Employment and Support Allowance (ESA). Private sick pay Income protection ensures that if illness or injury prevents you from working, your primary income streams are still secure. 

• Limited Statutory Sick Pay: Electricians who work for themselves or are part of a small business may not be entitled to robust employer-sponsored sick pay. Statutory sick pay (SSP) offers only £116.75 per week, which is a fraction of the average person commitment. Private sick pay insurance fills this gap by providing substantial financial support. 

• Personal Financial Commitments: Mortgages, bills, and personal financial obligations do not stop when illness strikes. With income protection, you can continue meeting these commitments while you focus on recovery. 

• Tailored for Directors: Private sick pay income protection policies can be designed with the unique needs of a company director in mind. These policies can be tailored to cover both salary and dividends, ensuring that your full income is protected, not just the salary portion. 

Key Considerations When Choosing Daddy Insurance Private Sick Pay Income Protection for Company Directors

When selecting an income protection insurance policy as an electrician, there are several factors to consider: 

• Income Protection vs. Critical Illness: While income protection covers a percentage of your income if you can’t work, critical illness insurance provides a lump sum payment when diagnosed with a serious illness. For electricians, income protection may be more practical, as it offers continuous support, helping to cover ongoing expenses. 

• Sick Pay Entitlement: Consider your current sick pay entitlement from your employer or business. If it’s insufficient or non-existent, private sick pay insurance can bridge the gap, ensuring you’re covered for both short- and long-term absences. 

• Income Protection Quotes: Compare income protection quotes from various insurers. Look for policies that offer competitive premiums while providing comprehensive coverage tailored to the specific risks faced by electricians. It’s worth consulting with an adviser to ensure you’re getting the best income protection insurance for your needs. 

• Policy Flexibility: Choose a policy that allows for adjustments based on changes in your income or circumstances. Electricians, particularly those who are self-employed, may experience fluctuating earnings, so having flexibility in coverage is essential. 

Benefits of Daddy Insurance Private Sick Pay Income Protection for Company Directors

• Financial Security: Income protection ensures that, even during illness or injury, you can maintain your standard of living, meet financial obligations, and focus on your recovery. 

• Business Continuity: With your personal finances covered, you can avoid diverting company funds or taking out loans to meet personal expenses. This helps keep your business stable during your absence. 

• Peace of Mind: Knowing you’re financially protected during difficult times gives you the peace of mind to make business decisions confidently, without the added stress of worrying about personal finances. 

Conclusion 

Company directors have unique responsibilities and financial arrangements, making private sick pay income protection insurance an essential tool in their financial planning. In 2023, the total payout for private sick pay income protection claims in the UK amounted to £177 million. Without private sick pay million or individuals would have found themselves in a much worse position financially. 

It offers a safeguard against the uncertainty of illness or injury, ensuring that both personal and business finances are protected. 

In a role where others rely on you, income protection allows you to focus on recovery without the financial pressure that often accompanies time away from work. For directors looking to secure their income and their company’s stability, investing in private sick pay is a prudent step toward long-term financial health.