Last Updated on April 8, 2024 by Umer Malik
Income Protection Ireland is a type of insurance that will pay out a specified monthly income if you are unable to work for a period of time. With no restrictions on the number of benefit periods, income protection can provide a regular payment to cover your outgoings, including mortgage payments and other essential expenses.
What is Income Protection?
In simple terms, Income Protection is insurance that will pay out a monthly income if you are unable to work due to illness or injury.
You can buy Income Protection Insurance from a number of providers and there are two main types of policy:
- Short-term – These policies typically last for between one and five years and the amount they will pay out varies depending on how long you have been paying into your policy. They tend to be more expensive than long-term policies, but are easier to get approved for because they don’t require medical evidence or any health checks.
- Long-term (or permanent) – These policies usually last for five years or until retirement age (65 years old), whichever comes first. The payout amounts are generally lower than short term ones, but again this depends on both your age and level of sickness benefit entitlement before claiming on either type of scheme
How does it work?
Income Protection insurance is also known as income replacement insurance. This means that if you are unable to work due to injury, illness or disability, your monthly income will continue to be paid out. The amount of cover and length of benefit period is determined by your income source. If you receive a salary from an employer then this is your main source of income and so the cover will be based on this figure.
If you are self-employed then it’s more complicated – we’ll look at that in more detail later on in this article.
Unlimited Benefit Periods
Unlimited Benefit Periods
The reason why Income Protection (IP) is so popular in Ireland is because it offers unlimited benefit periods. This means that you can claim for as long as you need and for any reason, whether it be a new injury or illness or even a relapse of an old one. You can also claim for the same reason over and over again if required. It’s extremely flexible compared to other forms of insurance such as Critical Illness Cover which only allows one single claim per illness/injury throughout the policy term
Do I need to buy income protection from my bank?
You may be surprised to learn that you don’t have to buy income protection from your bank. In fact, you can purchase this kind of insurance from any provider in Ireland. That said, it is important to understand the terms and conditions of your policy so that it will meet all of your needs.
The best way to compare different providers is through an online quote comparison service like Defaqto or Moneyfacts – both are free and make it easy for consumers to see exactly what’s on offer before they buy anything.
How much does Income Protection cost?
The cost of income protection depends on the age of the insured. The younger you are, the cheaper it will be; this is because older people are more likely to make claims and their health costs more. As a result, you can expect your premiums to be higher if you’re over 40 years old.
For example:
- Someone aged 35 would pay an average of €1,947 per year for a disability benefit at 80% salary replacement level
- Someone aged 50 would pay an average of €1,378 per year for a disability benefit at 75% salary replacement level
The gender of the insured matters too when calculating how much income protection will cost them each year. Women tend to have better health than men on average and so insurers charge them less for their policies (this is called a “gender loading”). On average women pay about 15% less than men for income protection cover at its cheapest level.
Why should I even consider getting income protection?
You might be wondering why you should even consider getting Income Protection Ireland. After all, isn’t the purpose of insurance to protect your assets in the case of an accident or illness? That’s not necessarily true with income protection cover.
You don’t need to be injured or disabled to get a payout from your insurance provider. You could still get a pay-out even if you are ill. If that happened and you were unable to work for several months, how would you survive? Income protection provides financial support during such times by paying out monthly payments over a set period of time – usually two years at a time – based on the amount of cover purchased by the policyholder.
It’s important to mention here that most plans will exclude claims due directly from mental health conditions so make sure that those are covered before signing up for any policies!
you should always think about protecting your income
If you are self-employed, in a commission-based job or a small business owner, income protection is an important way to protect your income.
The cost of claiming on an income protection policy can range from €1.50 per week for basic cover up to around €10 per week for maximum cover. The cost depends on the amount of cover you want and how long you want that cover to last (usually five years).
If you are self-employed, an employee with variable pay or run a small business, think about taking out an income protection policy as it could provide valuable financial support if an accident or illness prevents you from working and earning money.
Conclusion
If you’re considering getting income protection, it’s important to understand how it works and whether it is suitable for you. Income Protection insurance can offer a sense of security when times are tough, but remember that it is not without risks if you don’t take care when choosing the right plan. Ensure that you read all the small print before signing up for any policy!
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