Income protection insurance is a type of financial product that protects you from losing your income. It is often referred to as “income protection insurance” or “pension” in Ireland but it can be purchased in other countries too, including the UK and Australia.
It’s important to understand exactly what this product does so you know whether it’s right for your needs and lifestyle.
Income Protection in Ireland – Enjoy Life With Income Protection Insurance
Income protection insurance is a type of insurance that pays out a regular income to the policyholder if they become sick or injured and are unable to work. It can help to cover the cost of living, mortgage payments and other outgoings.
Income protection policies provide benefits for those who have been diagnosed with an illness or injury which results in them being unable to work for certain periods of time. They also pay benefits if you are injured on duty but still need to work, such as police officers or nurses who may be called out at night time when there’s less chance of being harmed by criminals as well as providing cover during maternity leave/paternity leave periods where someone else takes over childcare duties while they’re away from home (or vice versa).
What is income protection insurance?
Income protection insurance is a type of insurance that pays out a monthly income if you are unable to work due to illness or injury. It is designed to replace a portion of your income in case you are unable to work due to illness or injury.
This form of protection can be purchased by employees and self-employed individuals, providing them with financial assistance while they recover from an accident or illness.
Who needs it?
Anyone who earns a wage or salary can get income protection insurance. This includes:
- Employees
- Self-employed people
- Retired people (but not pensioners) and those who are receiving benefits from a State Pension Scheme. The amount you can claim may be reduced if your earnings are below a certain level depending on how old you are and whether you have dependent children under 18 years old living with you at home. If these conditions don’t apply, then no reduction will occur when calculating how much money will be paid out in case of an accident or illness affecting one of your dependants (your spouse/life partner).
Why do you need life cover?
Life cover is the most common type of income protection insurance and it can help protect your family from the financial impact of your death. When you buy life cover, you’re insuring against your death by providing for their future financial needs such as funeral costs, inheritance and taxes.
Life cover is also known as permanent or whole life insurance because it provides complete coverage over a long period (up to 10 years). If you purchase this type of policy then when one person dies another will be able to continue paying premiums until they reach age 71.
How does it work?
The policy pays out a lump sum if you are unable to work due to illness or injury.
The policy also pays out a monthly income if you are unable to work due to illness or injury, but only if there is no other income available from other sources (e.g., disability benefit).
When does your policy start to pay out?
When you are unable to work because of an illness or injury, your policy pays out.
The amount that you receive depends on the type of claim made:
- If it was due to illness or injury, then your benefits will be based on your weekly earnings at the time of making a claim. This can range from €230 per week for someone who has been out of work for four years and is therefore entitled to maximum social welfare payments (€3600 per annum), up to €2700 for those with 15 years’ service and lower benefits.[1]
- If it was due to maternity leave, paternity leave or compassionate leave taken by either partner(s), then this benefit will also be worked out using their weekly earnings during this period.[2] In some cases however where both partners have taken similar amounts off they may be eligible for higher amounts.[3]
How much extra does it cost to add critical illness cover?
With income protection insurance, you can add critical illness cover to your policy. This pays out a lump sum if you are diagnosed with a critical illness such as cancer or heart disease.
There are two types of critical illness cover: general and specific. General critical illness covers all terminal illnesses (such as cancer) while specific versions target specific conditions like breast cancer or Parkinson’s disease. Either way, it’s not cheap! If you don’t already have any income protection insurance then adding this type will cost an additional €5-10 per month on top of your existing payments – which could be around €10k per year!
It is important to get income protection insurance.
Income protection insurance is a good idea if you’re self-employed and can’t work, or you work in a job where an injury could leave you unable to earn money. If you have children, income protection insurance can also be useful if something happens to your partner and leaves them unable to work at home with them.
If someone has been diagnosed with cancer then they may need time off from their job so that they don’t get sicker – this could mean missing out on pay for several months as well as having medical costs paid by the company (up until certain limits). Income protection insurance would cover these costs during this period so that the person doesn’t lose wages due to illness or disability.
