When a self-employed professional in Wandsworth started thinking seriously about what would happen to his family if he couldn’t work — or wasn’t around at all — he knew his existing cover wasn’t up to the job. Executive income protection for self-employed professionals is one of the most overlooked areas of financial planning, and for business owners in particular, getting the structure right matters as much as the level of cover itself.
What was the situation?
The client ran his own business and had reached a point where he wanted more robust protection in place — cover that reflected the reality of what his family depended on, and that could be arranged in the most tax-efficient way possible. He had a recent shoulder injury being treated with physiotherapy, and an earlier investigation for a separate medical matter that would need to be disclosed to insurers. He came to Oakstead knowing he needed both life cover and income protection, and that his circumstances weren’t entirely straightforward.
What was the challenge?
Clients with active treatment or recent medical investigations require careful handling with insurers. Both the shoulder injury and the earlier medical investigation needed to be disclosed fully, and the underwriting outcome would depend on how that disclosure was managed and which insurer was approached first.
The level of cover requested also triggered additional requirements. At £1 million of life cover, a full medical examination was required before terms could be confirmed. The client also had a history of smoking, though he had since stopped. Whether he would qualify for ex-smoker rates — rather than smoker rates — depended on a cotinine test, a urine or saliva test that confirms nicotine is no longer present in the body. The difference in premium between smoker and ex-smoker rates at this level of cover is material.
The goal was to secure the strongest possible terms across both policies while managing the underwriting complexity and structuring everything through the business.
James was a great partner throughout my life and income protection policy process. He was available and guided me through each step.
What did we do?
The first decision was how to structure the cover. Because the client was self-employed and paying premiums through his business, two specific policy types were used: Relevant Life cover for the life insurance element, and Executive Income Protection for the income protection element. Both are paid by the employer rather than the individual, which means the premiums are typically treated as a business expense and the benefit sits outside the individual’s estate for tax purposes. For a business owner, this is significantly more efficient than paying for personal protection out of post-tax income.
The Relevant Life policy was written in trust from the outset. This means that in the event of a claim, the lump sum would be paid directly to the nominated beneficiaries without forming part of the client’s estate — keeping it outside probate and away from inheritance tax.
On the underwriting side, the cotinine test confirmed ex-smoker status, which meant the client qualified for non-smoker rates — a meaningful reduction at this level of cover. The full medical was arranged and completed as part of the application process. The policy was ultimately issued, though with a rated premium reflecting the medical history and an exclusion applied to the shoulder condition.
What was the outcome?
The client left with £1 million of Relevant Life cover and £4,000 per month of Executive Income Protection. Both policies are paid through the business. The life cover sits in trust — structured in a way that is both tax-efficient and financially meaningful.
For a self-employed professional with a family depending on him, the value isn’t in the paperwork. It’s in knowing that whatever happens, they’re protected.
If you’re self-employed and unsure whether your protection is structured in the most effective way — or if you have a medical history that’s made you hesitant to apply — Oakstead can help you understand your options and find cover that actually works for your situation. Arrange a consultation with Oakstead Finance.
