Income Protection Ireland Case Study
If you had to ask the average person on the street what an Income Protection policy means to them, most would arguably reply that they have no need for it or that its a waste of money to pay all those premiums because they’ll likely never be able to use the policy.
However, coming across the countless amounts of people claiming on their Income Protection policies in Ireland, we beg to differ.
To demonstrate the importance and potential need for an Income Protection plan, we have put together a case study and some success stories of claimants who were fortunate enough to have secured an Income Protection policy prior to severely injuring themselves or falling victim to a serious illness.
How can Income Protection help me?
Income Protection is a form of insurance that replaces your income if you can’t work due to an illness, injury, or disability. If you are put out of work because of this and you don’t have Income Protection, it can quickly become a worrisome situation, as you would still have mounting bills to pay but no replacement income to pay for them. Sure, you may get sick leave from your employer, but likely not enough.
An Income Protection plan gives you a replacement income as long as it takes to get you back on your feet and return to work, or a ceasing age (date) of your choosing. It will cover up to a maximum of 75% of your salary and a maximum benefit amount of €262,500, and the cost depends on the percentage of income that you want to insure and when you would like the benefits to kick in. Depending on your budget, you can tailor the amount of cover suitable to your needs. Refer to the below example, where we will illustrate an Income Protection Ireland case study…
Can I get Income Protection tax relief in Ireland?
Yes, you can. The tax relief will reduce the cost of your cover by up to 40% if you pay income tax at the higher rate.
Income Protection Ireland Case Study
Many of us would face financial difficulties if we couldn’t work for a period of time due to an accident, injury or illness. Here’s a journey below to help you think about the impact of life with or without Income Protection:
Age 35, and owns his own home.
He works as a computer programmer and earns a salary of €52,000 a year.
An accident leaves Greg with a serious back injury, which results in him not being able to work for the next 5 months until his operation. Doctors have advised that his recovery may take a further year and a half.
In this example Greg’s Income Protection plan provides a monthly benefit of €2,244 (75% of gross income less current state illness benefit) until he’s age 68 after after a 13 week deferred period.
Greg’s life WITHOUT Income Protection:
Greg has €3,000 in savings but has no other financial protection in place.
Greg will receive sick pay from his employer for the first 3 months of his absence.
Company sick pay ends, and Greg is surviving on the state illness benefit of €232 per week and needs to dip into his savings to pay his bills. Greg is very anxious due to his ill health and financial situation, but he cannot afford to seek professional help.
It’s Greg’s fourth month at home waiting for his surgery. He continues to receive the Social Welfare pay of €232 per week. Despite cutting back wherever he can, Greg still faces a significant shortfall between his income and his outgoings. He’s forced to use the rest of his emergency fund and now has to rely on his credit cards to cover his bills and expenses.
Greg has had his surgery and returns home for a further period of time for post-op recovery. His emergency savings have been completely depleted. Greg has to go to his parents to ask for a loan.
For financial reasons, Greg needs to return to work. He would benefit from physiotherapy, but unfortunately, he cannot afford to pay for private physiotherapy. While he was off work and dependent on the state illness benefit, he had to make difficult financial decisions. Greg could no longer afford to pay his mortgage and had to move home to his parents and rent out his home to ensure his mortgage repayments were paid.
Greg’s life WITH Income Protection:
Greg’s broker helps him search the market for an Income Protection plan that best suits him. After careful consideration and assessing his options, he decides to go with Aviva. Greg has €3,000 in savings and now has an Income Protection policy which gives him a monthly benefit of €2,244. This policy also gives Greg access to Aviva Care at no extra cost.
Greg gets sick pay from his employer for the first 3 months of his absence. He is admitted to hospital for tests over a 2-week period and claims on his hospital cash benefit which was automatically included in his Income Protection plan, and receives €318 per day for the duration of his stay in hospital. His doctor has recommended surgery and advised that his recovery will be slow so he submits his Income Protection claim to Aviva.
Using Aviva Care, he decides to get a second medical opinion through the Best Doctors service regarding his surgery.
Greg receives his second medical opinion, which agrees that surgery is the right course of action. This gives him greater peace of mind.
His deferred period has come to an end, and his Income Protection claim is accepted. He receives his first payment of €2,244 per month from Aviva, along with his state illness benefit of €232 per week. His waiver of premium benefit means he no longer pays his monthly Income Protection premium while on claim.
Greg can pay all his bills. Greg decides to reach out to the Aviva Care mental health service due to the anxiety he’s feeling regarding his ill health. This enables him to speak to a psychologist at no extra cost
It’s Greg’s fourth month at home, but with his monthly Income Protection payment, Greg can cover all his monthly bills and expenses. He doesn’t need to dip into his savings. The Mental Care service that he has availed of has given him coping mechanisms to deal with the stress and anxiety he was initially feeling regarding his accident
Greg has had his surgery and returns home for post-op recovery. He doesn’t have any financial concerns, so he can focus on his recovery.
Greg has fully recovered from his surgery and is ready to return to work. During the period of his claim, his Aviva claims handler arranged ongoing rehabilitation benefits at no extra cost, assisting in his full recovery. As his Income Protection policy replaced 75% of his earnings during this period, Greg’s finances are in good shape, and he feels ready to return to work.
Income Protection Success Stories
Carole’s Story: Injury/Accident
Problem: Back injury accident & heart surgery
Solution: Income Protection plan
Result: Income Protection paid for the physio to treat the injury; heart surgery, and pay for her mortgage and utility bills. She then recovered from the injury and was able to return to work in a reduced capacity.
Marc’s Story: Injury/Illness
Problem: Blood clot & heart condition
Solution: Income Protection plan
Result: Income Protection paid for treatment for his heart conditions, and still regularly pays for his bills.
How we can help you:
Compare the Market:
Save time and the stress of guessing who the best insurer is. We quote all providers across the market to ensure you have a plan that is best suited to your particular needs.
If you have a current plan, we can review your benefits to see if you are getting the most out of your plan.
Save you Money:
We could help you to reduce the cost of your premium. For example, if you have stopped smoking for the last 12 months you could get a premium discount of up to 50% off your current premium.
Need a Quote, or to speak with a Financial Advisor?
Fill out your details and inquiry below, and one of our Qualified Financial Advisors will get back to you shortly.