The government pays towards your income protection insurance because it saves them money on social welfare. By giving you tax relief, they are rewarding you for taking out income protection insurance and saving on benefit payments.
Income protection insurance pays your salary when you cannot work. It is a form of insurance for the rainy day when you are off work, and your sick pay runs out after a week or two.
The income protection insurance kicks in, and you do not have to turn to the Social Welfare. Income to your home is still high, and you can pay for rent, mortgage and the day-to-day expenses.
Social welfare payments at the basic level are around €220 per week. Even when you claim for additional allowances, the chances are that you are still claiming less than €300 per week, way below the average national wage.
When the time comes for you to claim on your income protection insurance, you will enjoy the benefit of up to 75% of your salary. In every case, this is more than what you could claim from social welfare.
The income protection insurance payments keep your salary at a good level while it stops you from claiming social welfare payments. In this way, the government saves the money it would need to pay you if you claimed social welfare.
The government also likes to keep down the number of social welfare recipients, and income protection insurance is an excellent way to do so.