Income Protection Insurance Ireland

Income protection insurance is designed to partially replace lost income due to medium or long-term illness or disability. To qualify for cover, you must be in paid full-time work or be self-employed. It does not cover redundancy.

The deferred period: what you should know

Insurers pay out only after the policy holder has been unable to work at their job for a certain period of time. You can take control of this by choosing the deferred period you think would best suit you. The typical periods are:

• 4 weeks
• 13 weeks
• 26 weeks
• 52 weeks

The shorter your deferred period, the higher your premium. For instance, if you choose cover to begin after four weeks of unavoidable unemployment, your premium will be higher than it would be if you had chosen a deferred period of 52 weeks. Before you make a decision on the deferred period, check if your employer offers sick pay and, if so, how much and for how long.

You may need income protection in Ireland if:

• You are self-employed – the self-employed are particularly at risk as they cannot claim sick pay and do not qualify for social welfare disability benefit.
• Your employer does not provide sick-pay
• You have no ill-health pension protection
• You have dependants who rely on your income
• You have no other source of income or money
• Benefits to which you may be entitled would not be enough to cover the cost of living

How do I get it?

The ideal situation when taking out income protection insurance in Ireland is as part of a group scheme, such as those provided in the workplace, as it is often cheaper and insurers require less detailed medical information in this scenario. If you take out an individual policy, it may be more expensive and you will likely need to give more detailed information to your insurance provider.

The cost of your premium and the income protection quote you receive will depend on factors such as:

• Your deferred period (see above)
• The amount of your cover (calculate as a percentage of your income)
• The length of your policy.

There are other considerations to take into account, such as age, health, job type (some are considered riskier than others and, as such, cost more) and lifestyle.

If you are insured as part of a group, you will be paid a pre-agreed amount stated in the group policy. This is based on a proportion of your earnings minus any other payments you get when out of work, such as sick pay or social welfare disability.

If you have an individual policy, you have greater control over the amount you wish to be paid, should circumstances dictate. You can set the amount for which you want to be insured when you take out the policy, within limit. The maximum you can claim is usually 66% or 75% of your earnings before you became ill or disabled. This is minus other income you get when out of work, such as sick pay and the single person’s social welfare illness benefit, if you are entitled to it.

Your benefit payment will cease if:

• You go back to work.
• You reach the ‘benefit cessation age’. This is the age stipulated in the policy and should be no later than your planned retirement date.
• The insurer’s medical officer deems you fit to return to work.

You may not need payment protection insurance if you are entitled to other benefits, such as:

• Social welfare disability benefit, which is a weekly payment from the state. The self-employed do not qualify.
• Sick pay, where an employer pays all or part of your wages for a given period.
• Ill-health retirement pension. This permits you to take early retirement with a pension if you become permanently unable to perform your job.