Protecting your most valuable asset – Your Income
Anyone can become too ill to work or have an accident at any time. And if this happens, it can turn your world upside down both emotionally and financially. Being ill is stressful enough for both you and your family, so if the time comes it is important to be able to concentrate on getting better, without any financial worries. It may surprise you to know that a staggering 85% of the Irish workforce don’t have any form of income protection and will be relying on their Employer and the State to continue paying them if they are too ill to work. Lots of employers don’t provide any form of sick pay and for those who does, the majority will only pay you for 6 months.
For most of us, our income is our most important asset. It affects how we live and how we pay for everything from food, light and heating to our mortgage repayments, children’s education and family holidays. But what happens if you become too ill to work?
Income Protection enables you to protect what matters most in your life. It provides you with a replacement income if you are unable to work due to any accident or illness. This product protects your monthly income, making sure you continue to receive a regular income until you’re ready to return to work again or until your chosen retirement age if you are unable to go back to work.
Remember: Income Protection is also available through an Executive policy. This may be more cost effective for business owners and company directors.
Some other facts about sick pay and social welfare that you might not be aware of:
- Your employer is under no statutory obligation to provide sick pay
- In the private sector, 85% of employees would be fully dependent on the state benefit after 6 months of absence
- The public sector offers full pay for just 6 months. After that, you get half pay for only another 6 months
- The State Disability benefit pays only €11,876 per year to an individual. A typical family with one adult working, one adult dependant and 2 children would qualify for just €16,080
- If you are self-employed then you are not entitled to any benefit
A typical Income Protection plan you can protect up to 75% of your gross income less social welfare if employed. There are deferral periods from 8, 13, 26 and 52 weeks which means that for deferral (waiting) period you will not be able to claim until the end of this period. You can claim tax relief at marginal rate of tax up to 10% of income on these plans or can be done through Company scheme where company claims 12.5% tax on contributions. When in claim after waiting period you could be potentially on claim up to end of policy or when you go back to work.