What an income protection policy is and what it is not.

happy family income protection

We are concerned when we sometimes hear people talking about income protection, as they often don’t do it justice or sometimes don’t even appear to really understand it at all. In these situations, we always suggest that they sit down with a Financial Broker who will give them the A to Z on income protection, ensuring a full understanding of this really important protection product.

Income Protection insurance will replace your income if you are unable to work because of an illness or disability.

But to help you in the meantime, here goes a whistle-stop description of what income protection is and what it isn’t. 

Income protection is…

• It is protection against being unable to work due to illness or accident. So it relates to your physical capacity to carry out your work. When taking out an income protection policy, you choose a deferred period. This is effectively a waiting period of anywhere from 4 to 52 weeks before your claim becomes payable. The longer the deferred period, the cheaper the premium.
• Income protection is a replacement income. The insurance company effectively steps into the shoes of your employer and pays you your regular income instead, of your income protection benefit level. You will submit your tax credit certificate to them and they will pay you as a PAYE worker.
• Income protection is a benefit that continues to be paid until your retirement date.

So it ensures that your income is maintained right up until the end of your working life. Of course, if you recover in the meantime and return to work, the benefit ceases, as your employer then replaces the insurance company again as the payer of your regular income.
• Income protection is a fully tax relievable expense, so you can reduce your tax bill at your marginal rate by paying for income protection. 

Income protection is not

• It is not a lump sum payment if you fall ill. There is no once-off windfall payment, instead, it is a regular (and potentially far more valuable) monthly payment until you retire. If it’s the protection of a lump sum you want in the event of illness, talk to your Financial Broker about Specified Illness Cover. 
• Income protection is not restricted to a list of specific illnesses. Claims are paid on your inability to work due to illness or accident, whatever the cause might be.
• Income protection is not protection against redundancy. Claims are only payable when you are unable to work due to illness or accident.
• Income protection is not an income for life, it is payable until you get better or until your retirement age.  However, with most income protection policies, you can also choose to protect your pension contributions as well, thereby ensuring that your post-retirement planning and income stays on track.

Income protection is often known as the glue within a financial portfolio. Without income, everything is at risk – your mortgage, your pension, your other financial commitments. Now is the time to talk to your Financial Broker about securing your future income, and your peace of mind.

It’s important to get impartial professional advice

We have strong relationships with all of the major financial service companies in Ireland including New Ireland, Irish Life, Aviva, Zurich Life, and Royal London to ensure you get the most competitive income protection plan and one that suits your needs best.

As we are not tied to any one product producer, we provide impartial and independent advice so that you receive the most appropriate plan to meet your specific needs. The need to get this decision right, the first time should not be underestimated, so professional advice is essential.

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