What is Income Protection ?
Do you know what Income Protection is?
Income Protection Explained. Life can have its twists and turns but with Income Protection, you will be prepared if illness or injury prevents you from working for a period of time.
A long-term illness or injury that prevents you from working can change everything. Things you take for granted, such as paying your bills or your children’s education, become a struggle.
If you are self-employed, you will not get any help from the Government. Even if you are entitled to the State Illness Benefit, you will get just €193 per week (as of March 2017).
Will this be enough to cover everything you need?
With Income Protection, you can rest assured that if the unexpected happens, you can still maintain your basic standard of living and focus on the most important thing – your recovery.
Eligibility
You must be in full-time paid work as a self-employed person, or as an employee or company director to qualify for income protection.
Your occupation, health status and age could also affect your eligibility for the cover.
As a company director or employer, you can also offer group income protection to your full-time staff.
Decide how much of your income you want to protect
This depends on your salary; your sick pay arrangements and the amount of money you need to pay your bills and maintain your lifestyle. You can insure up to 75% of your normal income up to a maximum benefit of €262,500, less any social welfare payments.
Decide when you want your income protection to start
The time between the start of your sick leave and your first income protection payment is called your deferred period. You decide whether it should be 4,8 13, 26 or 52 weeks. For example, if your employer will pay you for 6 months, go for a deferred period of 26 weeks. The longer your deferred period, the cheaper the cost of your income protection policy.
Decide how you want to manage your payments
Here are your options: Guaranteed Premium
- Your premium level is set and does not change
- Your benefit level is set and does not change
- Reviewable Premium
- Your premium can be reviewed every 5 years, which will give you an option of an increase in premium or a reduction in benefitDecide how long you want to keep your income protectionHow much does it costs
- How much you pay each month depends on:
- Most people keep their income protection until they retire. But you can pick any age between 55 and 70.
- You can choose indexation on both of these options. This will make sure that your benefit increases as the cost of living goes up. Just remember, if your benefit increases, so will your premiums.
- Your age
- Your occupation
- Your health status
- Whether you are a smoker or non-smoker
- How much of your income you want to protect
- Type of plan you chooseI already have Specified Illness CoverThis is in contrast to Serious Illness cover, (or Critical illness) which pays a cash lump sum should you suffer one of the illnesses covered by the policy.For more information on Income Protection, contact Frank Ryan Financial Services.
- The most common income protection claims are for Psychiatric issues and Orthopaedic conditions. Whilst these conditions can stop you working they are unlikely to trigger a claim from Serious Illness cover.
- Income protection is designed to protect your earnings throughout your working life.If at any point you suffer an illness or injury, which stop you working, you would still have some form of income until you are medically fit to return to work or you reach the end of your benefit period.
- It won’t increase if you make a claim and you can claim tax relief on what you pay each month.
I already have Specified Illness Cover
Income protection is designed to protect your earnings throughout your working life. If at any point you suffer an illness or injury, which stop you working, you would still have some form of income until you are medically fit to return to work or you reach the end of your benefit period.
This is in contrast to Serious Illness cover, (or Critical illness) which pays a cash lump sum should you suffer one of the illnesses covered by the policy.
The most common income protection claims are for Psychiatric issues and Orthopedic conditions. Whilst these conditions can stop you working they are unlikely to trigger a claim from Serious Illness cover.
For more information on Income Protection, contact Frank Ryan Financial Services.