Income protection (also called Permanent Health Insurance or PHI) – do I need it? That is a question that many of us will have asked ourselves at some point or another. In order to assess the need, a number of questions need first be answered:

  • 1. Am I self-employed?
  • 2. If not, will my employer look after me financially if I’m out of work for a period?
  • 3. If I am out of work will I be entitled to social welfare payments?

If the answer is either yes to question 1 or no to both questions 2 and 3, then income protection may be of interest to you. So, what is income protection? Income protection is a type of policy that will pay you an income if you’re off work due to illness or injury. It can pay you up to 75% of your usual income less any social welfare payments, if any, you receive. You may be entitled to tax relief on the premiums up to a limit of 10% of your total gross income.

It is worth noting that, currently, the self-employed may not be entitled to social welfare payments if they are unable to work. Therefore, having some form of policy in place that will replace earnings in the event of being out of work is imperative for these people. This is especially important in situations where the person may have a young family or other dependents.

Ideally, income protection would be used in conjunction with serious illness cover. A serious illness policy will pay a tax-free lump sum should the policyholder be diagnosed with one of the illnesses specified in the plan. However, unlike income protection, this type of policy does not pay out should you be unable to work for reasons other than illness.

If you’d like more information or have any questions in relation to income protection or serious illness cover, please contact me on 087 9308181 or gerard@proactivefinance.ie.

Gerard Ward

30th April 2019