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Income Protection Ireland Case Study

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…

 

Do I need income Protection?

 

 

 

 

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

 

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:

 

Profile:

Meet Greg.

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:

 

 

Income Protection Ireland Case Study

 

Greg has €3,000 in savings but has no other financial protection in place.

 

 

Income Protection Ireland Case Study

 

Greg will receive sick pay from his employer for the first 3 months of his absence.

 

 

Income Protection Ireland Case Study

 

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.

 

 

Income Protection Ireland Case Study

 

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.

 

 

Income Protection Ireland Case Study

 

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.

 

 

Income Protection Ireland Case Study

 

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.

 

 

Complete the form below for an Income Protection quote...

 

 

 

Greg’s life WITH Income Protection:

 

Income Protection Ireland Case Study

 

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.

 

 

Income Protection Ireland Case Study

 

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.

 

 

Income Protection Ireland Case Study

 

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

 

 

Income Protection Ireland Case Study

 

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

 

 

Income Protection Ireland Case Study

 

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.

 

 

Income Protection Ireland Case Study

 

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.

 

Income Protection Success Stories Carole's Story InjuryAccident

 

 

 

 

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.

 

Income Protection Success Stories Marc's Story Injury-Illness

 

 

 

 

 

How we can help you:

Contact us for Financial Advice

 

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.

 

Policy Review:

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.

DD/MM/YYYY
e.g. €40,000
Select 'Smoker' if you have smoked tobacco products in the last 12 months.
Any additional comments?

 

Income Protection Insurance Ireland

 

What is Income Protection Insurance?

 

Income protection insurance, or Salary Protection Insurance, is an insurance policy that pays out a regular cash payment (each month) that replaces part of your lost income if you are unable to work due to a medium to long-term illness or disability (It does not cover redundancy). It must also not be confused with private health insurance.

 

To qualify for this insurance, you must be in full-time paid work or be self employed. Cover can be obtained between age 18 and 59, and can reach age 70 with certain insurers. 

Would you be able to replace your income if you were unable to work due to an accident or serious illness

 

Deferred Period:

Not everyone needs their income to start paying as soon as they are out of work. You can choose when your replacement income starts paying out. So if your employer pays you sick pay, you may only want your money to kick in after that.

 

The period in between your work ceasing and when the insurer starts paying you in known as the ‘deferred period’. You can choose how long you wish to delay the payment. It can be 1, 2, 3, 6 or 12 months (or 4, 8, 13, 26 or 52 weeks). The longer you wait, the lower your premiums will be.

 

You can claim tax relief on your income protection premiums.

 

Do I need Income Protection?

 

Consider this… You are put into a situation where an illness or injury stops you from working for a couple months or even years. You are trying to recover and get better, and in so doing you ask yourself, “where am I going to get the money to pay for my monthly expenses and commitments??”

 

Now sure, you may get some sick pay from your employer, or have some savings in the bank, however, that probably won’t nearly be enough to pay for expenses for medical treatments or pay off monthly bills such as your mortgage repayments, car insurance, utilities, weekly groceries, and children expenses & education (well let’s not go down that road…). Considering the weight of the above, you would indeed need sufficient income to support yourself and your family financially. Here, Income Protection has you covered!

 

You need income protection if you

 

It won’t happen to me…

 

It’s easy to think that “it won’t happen to you”, however, you may be surprised by the below statistics.

An illness or injury can happen at any time.

 

Every 3 minutes in Ireland someone gets a cancer diagnosis.

1 in 2 people in Ireland will develop cancer during their lifetime.

Heart disease is the most common cause of death in Ireland.

1 in 4 people in Ireland will experience some mental health problems in their lifetime.

Taking Aviva’s statistics for 2022, 26% of their income protection claims were for psychological illnesses such as stress and depression; and 22% were for orthopaedic conditions such as back injuries.

 

Source: Irish Heart Foundation © 2023, National Cancer Registry 2023, 2023 Mental Health Ireland.

 

If the above medical conditions occur it would cause you serious distress and negatively affect your ability to perform your role at work. Having supplemented income paid out to you while being off work will help you to focus on healing, recovery, and/or rehabilitation. 

 

Complete the form below to get an Income Protection quote...

 

 

How much cover can I get?

 

An Income Protection policy provides you with a replacement income of up to 75% of your annual salary before tax if you cannot work due to an illness or injury. Take into account that you would have to minus the state illness benefit that you are entitled to.

 

All insurers have a maximum annual limit on the amount you can claim, and is set at €250,000, with the exception of Aviva to which the maximum benefit is €262,500.

 

Self Employed Income Protection Calculation.

 

Is it affordable?

 

The cost of your Income Protection premiums are determined by the below factors:

 

Income Protection Insurance Ireland | cost of your premium

 

Personal Income Protection - Individual – Occupation Class 1 Accountant – annual salary €70,000 €600 benefit per week costs just €44.59 per month Age 35. Non smoker, entitled to state illness benefit, 75% of salary less €11,4

 

When applying for cover it is important that you answer the above questions honestly and as accurate as possible. If you should happen to claim from your policy and there is information that you did not disclose when applying, you may not receive any payout.

 

Complete the form below to get an Income Protection quote...

 

 

Additional Benefits of Income Protection

Income Protection

 

Many of the following benefits that come standard with one provider may have an extra charge with another provider – so its important to always use a broker to compare quotes across the market. The following can be included:

 

 

Specified Illness Benefit:

If this benefit is included in your plan it allows you to claim a once off lump sum if you are diagnosed with a specified illness listed in the policy.

 

Life Cover Benefit:

Certain plans can provide you with a lump sum payment in the event of your death. This would be an additional benefit for family members who would need to continue paying bills, mortgage repayments, or funeral costs, and so providing relief through a challenging time.

 

Terminal Illness Benefit:

If you are diagnosed with a Terminal Illness and you have less than 12 months to live, your payments will start immediately.

 

Continuation Option / Job Change:

If you move jobs or become self-employed within the term of the plan you will have the option to continue your policy without any underwriting (showing new medical evidence).

 

Guaranteed Premium:

Insurers offer guaranteed premiums on the plan. Once the policy is accepted, your premium remains at the same level throughout the plan.

 

Guaranteed Increase Option: 

This provides the opportunity to increase (top up) your cover at specific intervals without additional underwriting (further questions about your health, job, etc). The increase applies to the original cover amount each time.

 

Waiver of Premium:

This benefit allows you to pause your monthly premiums while making a claim on your policy. You would thereafter continue paying your premiums when you return to work.

 

Back to work Benefit:

This benefit provides extra support after a set period when you return full time after being off for a qualifying period, e.g., over 12 months.

 

Partial Payment:

This provides you with a partial benefit if you return to work part time or on a lower income due to a disability or illness, thereby bridging the gap in your earnings. 

 

Hospital Cash Benefit:

This provides a daily replacement income if your are hospitalized during the deferred period.

 

 

Rehabilitation & Guidance

 

Insurers like Zurich and Aviva are really stepping up their game in an effort to ensure that clients who are covered under their plans are well looked after and are in need of medical advice, assistance, and counselling.

Under Zurich protection plans, clients have access to a team of rehabilitation nurses who will go to meet you in your home and help put a plan in place to get you back to work. They also fund the costs of treatment with local physiotherapists or psychologists/counsellors which they can arrange in conjunction with your own GP, or pay for a specialist doctors visit to help you to avoid a long waiting list and get better quicker.

Aviva include a number of different benefits under their plans at no extra cost including the following:

 

  1. Digital GP – Aviva’s Digital GPs can provide you with an online diagnosis at home or away if your health has taken a hit, and can even provide prescriptions. You and your family can get an online appointment with one of their Irish registered doctors Monday to Friday from 8am to 8pm and on weekends from 9am to 12 noon.
  2. Best Doctors Second Medical Opinion If you need guidance on your diagnosis or treatment, this service provides a second medical opinion from a panel of 50,000 world-renowned experts to ensure that you are diagnosis is in fact accurate. 
  3. Family Care Mental Health Support Their counselling and psychotherapy service helps those who are struggling with stress or anxiety, feeling down, depressed or lonely, and are in need of help managing the emotional impact of life events, etc. Their Mental Health Support service offers quick access to tailored mental health advice from professional Psychologists in complete confidence.
  4. Bereavement Support – Aviva’s counselors will be there for you if you need a helping hand through a bereavement.

 

 

Income Protection for the Self Employed

 

Personal Income Protection is for the self employed or those who are in a job that doesn’t provide an income protection plan and want to set up a policy independently of their employer.

 

This will pay out a regular cash payment that replaces part of your lost income if you cannot work due to a medium to long-term illness or disability.

 

Tax Relief:

With Personal Income Protection you can get tax relief at your marginal rate on the premiums you pay. 

 

Claiming tax relief is really important as it reduces the cost to you by the rate you pay tax at – so either 20% or 40%. For example, if you are a higher rate tax payer, a monthly premium of €50 would effectively only cost you €30 as you would claim tax relief at 40%.

 

 

Income Protection for Company Directors

 

Executive Income Protection is a cost-effective solution that allows employers to provide income security for company directors and key employees up to 75% of your earnings (less any social welfare payments) in the event of an unforeseen illness or injury in your business, up to a maximum of €262,500.

 

This plan works similarly to an ordinary income protection policy offering a replacement income, only difference being, the executive income protection is taken out and paid for by the business on behalf of the Director or employee. In the event of a claim, the benefit is paid directly to the company who continues to pay the employee or director through PAYE whilst they are unable to work.

 

Protected Pension Contributions:

In addition, the Income Protection plan can also allow for the cost of pension contributions to be covered. Contributions can be protected up to 33% of salary to a maximum of €50,000. The policy will also ensure employer pension contributions are maintained whilst claiming on the policy. 

 

In the event of an insurance claim, the insurance company will pay your benefit directly to you, after tax, USC and any other relevant deductions.

 

Tax Relief:

The premiums that are paid for by the employer qualify as an allowable business expense that can be offset against corporation tax.

 

If you need to claim, the insurer will pay the income benefit to the employer, who passes it onto the employee through salary, making any relevant tax and USC deductions. With a tax deductible premiums, you will continue to be paid while you’re unable to work. 

 

 

How can a Financial Advisor help?

Contact us for Financial Advice

 

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.

 

Policy Review:

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.

 

DD/MM/YYYY
e.g. €40,000
Select 'Smoker' if you have smoked tobacco products in the last 12 months.
Any additional comments?