OBN Financial Services Blog

Income Protection

Income Protection provides you with a regular income if you are out of work due to illness or injury.

If you are employed but not entitled to payment while sick you should consider Income Protection.

You can use Income Protection to replace up to 75% of your income less your social welfare entitlement. Payment of benefits commences when you have been off work for a specified period of time (called the deferred period). The payments continue until you are fit to return to work, or until you chosen retirement age.

  • As with private health insurance, you are entitled to tax relief on any premiums you pay at your marginal rate of income tax
  • It is available with a reviewable premium or with a guaranteed premium (stays at the same level for the duration of the policy)
  • How you use the income from an Income Protection policy is up to you.

You select;

  • how much income you wish to protect*
  • the deferred period 13, 26 or 52 weeks
  • the ceasing age of the policy i.e. age 55, 60 or 65
  • the type of premium you wish to pay (guaranteed or reviewable)

* if you have a claim on this type of policy the insurance company will only pay your current income X 75% less social welfare entitlements. Assuming that you would be entitled to social welfare while sick an income of €33,000 p.a. would therefore require you to insure c€15,000 p.a. or €288 per week.

These policies are regarded by many as expensive but this isn’t always the case, especially if the proposer is young and a non-smoker. To give an example, a 27 year old non-smoker tradesman on €33,000 p.a. who wishes to insure a weekly income of €288 would pay a premium of €25.95 per month (at current rates) and after tax relief the net premium would be €20.76 per month.

If there has been a change in your status or financial situation since you last reviewed your protection products, you should review them now to ensure that they are suitable for your needs. Contact Eoghan on 086 606 5008, by using the contact form below, or by email to eoghan@obn.ie.

Comments in this blog are general in nature and should not be taken as financial advice as no assessment has been undertaken in relation to your financial situation or objectives. 

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