Happy New Year, here’s hoping it will be a peaceful, healthy, and prosperous one!

However, what if an illness, injury, or disability were to prevent you from going to work this year? How would you manage all of those outgoings that you currently pay for from your salary or wages?

Nobody wants to think about being injured, ill or unable to work but it is something that you should spend a few moments thinking about as you put away the Christmas decorations and prepare to return to work.

Income Protection Guide

Table of Content

Sick Pay and Entitlements

Your employer will pay you sick pay, should you be unable to go to work. Statutory sick pay in Ireland has increased from 3 days to 5 days since 1st of January 2024. That’s 5 days a year on 70% of your pay, up to a maximum of €110 per day.

If you were injured, disabled, or seriously ill, you could be out of work for a lot longer than that and you could be relying on a State Illness Benefit or Disability Allowance of €232 per week.

Illness, injury, and disability can be financially devastating for your finances, aside from the pain, suffering, and emotional toll that being ill or injured can cause.

Income Protection Insurance

Income protection is a form of insurance that will pay you a benefit, should you be unable to work due to illness, disability, or following an injury.

Following the deferred period, the time period before you are paid any benefit on your income protection policy, your income protection insurance will pay a benefit to replace up to 75% of your income should you be unable to work.

For a monthly premium, you will be protected should you be out of work following illness, injury or disability. You can receive benefits for two years, or for the remainder of the term of the policy, depending on the type of cover you choose.

How much is Income Protection Premiums

The amount you will pay depends on a number of factors:

Your salary will determine how much you pay for income protection as income protection is intended to replace your salary. If are paid a higher salary or are a high earner, you will pay a higher premium for your income protection.

Like your salary, the level of cover you choose will determine how much you pay for income protection. If you choose to insure a high proportion of your salary, up to a maximum of 75%, you will pay more for income protection.

Occupations are categorized depending on the likelihood that an insurer will have to pay you benefit with

Class 1 occupations- largely office and desk based eg. Accountant, computer programmer.

Class 2 occupations- largely office based with some light physical work eg. Hairdresser, laboratory technician.

Class 3 occupations- occupations which include some physical work eg. Primary teacher, social worker.

Class 4 occupations- occupations which have an element of physical labour and risk eg. Carpenter, plumber.

When you take out an income protection policy, you will pay more for income protection if you are older. Generally, too, your age will affect the term of the policy you are offered as each insurer has maximum age limits.

If you have pre-existing conditions eg. Diabetes, arthritis or have previously recovered from a serious illness eg. Cancer, you will need to disclose this to your income protection insurer. They may charge you a higher premium for income protection or you may face exclusions in cover.

If you are a smoker, you will pay more for income protection. Your lifestyle such as alcohol use, BMI, and your hobbies may affect the premium you pay for income protection insurance. Generally, your premium is based on the risk you are perceived to present to the insurer.

The deferred period is the time period that must elapse before you are paid any benefit on your income protection policy.  For example, if your employer pays you sick pay for six months when you are unable to work, you may choose this time period as your deferred period.

Generally, the longer the deferred period in your income protection policy, the lower your premium for income protection will be.

Most income protection insurance products are based on the benefit being paid for the remainder of the term of the policy, should you remain unable to work for the full time period involved.

Some income protection policies have a time limit eg. 2 years, following which no further benefit will be paid. These are generally more affordable income protection policies.

Most income protection policies are based on the premium being fixed for the term of the policy, having been determined by your circumstances eg. Age, occupation, or health when taking out the policy.

Some income protection products are offered with ‘reviewable protection’. This means that, after a set number of years of paying the initial premium, your insurer will review your circumstances and continue top offer you protection based on a reviewed premium. As you will be older and may be in poorer health as time goes on, this type of policy is best avoided.

Income protection policies on the Irish market are usually offered on an ‘own occupation’ basis. This means that you have to be unable to work at your usual occupation to be eligible for benefit. For example, if you work as a nurse, you would need to be considered unfit to return to working as a nurse to receive benefit.

However, some policies are offered on an ‘any occupation’ basis which would mean that you would need to be classed as unfit to work at any occupation to remain receiving benefits. This type of cover may be cheaper than ‘own occupation’ cover.

You may choose to protect against inflation by choosing to increase your benefit by a set percentage each year at the outset of the policy. This will usually mean that you pay more for income protection.

How to get more affordable income protection premiums

The most important advice in choosing any insurance product is to shop around. Insurers vary in how the above factors affect your premium and in how they view pre-existing health issues, or occupational classes so it is always a good idea to get a few quotes.

Why not use our online assessment or speak to one of our advisors. We can discuss your options with you and find an income protection policy that is the best fit for you from the following list of insurers:

In these days of the cost of living price increases everywhere, there are more affordable options to protect your income.

You may wish to choose protection that covers a lower proportion of your income, especially if you are on a higher salary, or choose a longer deferred period if you have generous sick pay benefits from your employer or significant savings. If you are self-employed, you may still prefer a shorter deferred period as you have less entitlement to social welfare payments and you will not receive employer sick pay.

If you find that your occupational risk is too high to find affordable (or any) income protection, then you may choose a wage protector product. Aviva offers Wage Protector which will replace a proportion of your income for 24 months if you are unable to work, and further benefit if you suffer severe disability.

Support to Return to Work

Many income protection insurers offer wellbeing and therapeutic support to their income protection customers. Supports such as nurse advice, second medical opinion, or psychological or bereavement counseling may be available from different insurers. It is worth checking what is available with your policy, as these supports may facilitate your return to work, should you be in a position to return.

Income Protection insurers may offer proportional payments, should you return to work part time or in a less senior role than before. This would mean that you could retain a portion of your payment to make up for the reduction in income involved.

If you wish to change career following an illness or injury, some insurers offer therapeutic support to enable you to do so.

Be protected in 2024

It is easy to put off thinking about income protection. Nobody wants to start the new year thinking about being ill or injured and unable to work.

However, income protection gives you peace of mind that your essential outgoings such as mortgage payments or debts would be covered should you be out of work.

Fill out our online assessment or speak to one of our advisers today and we can help you to find affordable income protection to fit with your circumstances and your financial situation. You will be glad you made the time.

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Eligible For Income Protection Insurance?

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