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info@covermore.ie
Considering Your Needs
Choose between guaranteed and reviewable premiums.
Guaranteed premiums are fixed and never subject to review, whereas reviewable premiums are cheaper but may be subject to increase by the insurer once every 5 years. If your job involves a lot of manual work you may want to consider a version of income protection called “wage protector” as described further on if you want to only protect mortgage repayments as opposed to maximum salary-related benefits that option also exists.
Income Protection – Features, Facts & Figures
Features of Income Protection
- Pays up to 75% of your usual income, allowing you to continue to take care of your loved ones;
- Has a guaranteed level premium option which means the cost will never go up, even if you make a claim;
- Premiums qualify for Tax Relief;
- Pays a daily replacement income, if you are in a hospital for more than seven days during your deferred period;
- If can maintain cover even if you move job, anywhere within the EU;
- The cover can be increased every 3 years, by up to 20% of your original cover level, without further medical information.
Income Protection Insurance – The Facts & Figures
- One in three people in Ireland will develop cancer during their lifetime (Irish Cancer Society, 2018).
- An estimated 30,000 people are living in the community with disabilities as a result of a stroke (Irish Heart Foundation, 2016).
- Aviva’s, Ireland’s largest income protection provider, paid out over €42 million in Income Protection claims in 2018.
With medical advances, people are more likely to survive serious illnesses but, this means that more people are likely to take prolonged periods off work for treatment and recovery. This could have a huge impact on their ability to earn. Could you continue to pay these bills if, you lost your regular income? If the answer is no, you need income protection insurance.
Different Types of Income Protection
Two main kinds of income protection exist – Personal Income Protection and Executive Income Protection, the only real differences are that with Executive Income Protection, the company rather than the individual pays the premium and receives the benefits to pass on to the insured employee.
Also, under the Personal Income Protection category, there are 2 further options known as Wage Protector and Mortgage Income Protection, these are outlined in more detail further on.
Automatic Policy Benefits
Other benefits include rehabilitation assistance, relapse benefit, partial benefit, home-visits with independent qualified nurses or professionals, return to work support, and career change guidance.
Cover Level
You can cover yourself for a maximum of 75% of your normal basis annual income, less the state disability benefit where applicable.
Deferred Period
This is the waiting period prior to which claim payment commences. It can be between 8 and 52 weeks, with most people choosing 13 weeks.
Policy Ceasing Age
This is normally your expected retirement age up to a maximum of age 70. If a claim occurs and you have not recovered the policy benefit pay-out will continue to this age.
Occupational Risk
Your occupation is very important as not all occupations are covered; particularly occupations that have a degree of occupational risk, e.g. working with hazardous materials, at certain heights, or working in confined spaces.
Below is a basic guide that will give you a good idea of what class your occupation falls into. If your occupation does not feature on our website, please contact us so we can confirm if you are eligible to apply for Income Protection.
Class 1
White-collar occupations: no appreciable accident or health risk. These occupations will usually be office-based. Examples include Accountants, GP’s, IT Consultant, Solicitors, Administrators, etc.
Class 2
Mainly white – collar and predominantly administrative. Driving may be involved. Examples include: Childcare Worker, Dentist, Sales Rep, etc.
Class 3
Skilled occupations, which may involve light manual duties but any heavy lifting is rare. Examples include Interior Decorators, Foremen, Electrical Engineers, and Nurses, etc.
Class 4
Skilled tradespersons, working on construction sites using light power tools. Examples include Carpenters and Plumbers.
Income Protection – Wage Protector for higher risk occupations
Wage Protector
When it comes to occupations that involve manual work, the risk of making an income protection claim is higher, so as a result, the premiums are higher. So, if you are a tradesperson, or your job involves manual duties, a cheaper version of income protection exists known as Wage Protector.
With Wage Protector, your coverage kicks in after your chosen deferred period and pays you a replacement income for up to 2 years, if you are unable to do your own job. This gives you an opportunity to get back on your feet or prepare for an alternative job.
After this initial period, depending on your circumstances, full long-term payment may apply, if you are unable to return to any work due, to your significant illness, or injury and continue to suffer a loss of earnings as a result. Once 2 years of payments have elapsed, you must pass a Functional Assessment Test to qualify for this cover. This is a straightforward set of physical and mental ability tests.
If you need more information on wage protector
Income Protection – Mortgage Protector to protect your mortgage repayments
Mortgage Repayments Protector
Mortgage Protector is a form of income protection, designed to specifically cover your regular mortgage loan repayments if you were out of work due to an illness, or disability. It differs from regular income protection, in that the cover amount relates to your mortgage loan repayments, rather than your regular income and it is set up for the term of your mortgage, rather than to your normal retirement age.
Income Protection Quotes – FAQ's
What is income protection insurance?
Income Protection Insurance is an insurance policy designed to help replace your income due to any illness, or injury preventing you from being able to work, for a prolonged period. The maximum cover level permitted is 75% of your regular annual income, less the state disability benefit, where you’re entitled to this benefit as an employee or as a self-employed individual in Ireland.
Who is eligible for Income Protection
You must be in full-time paid work as a self-employed person, or as an employee or company director to qualify for Income Protection and to receive benefits in the event of a claim.
How much income can I protect?
The maximum that you can cover yourself for is 75% of your income less any social welfare entitlements (currently €10,561 per annum). Note if you are self-employed or a company director you may not be eligible State Illness Benefits.
There are some limits which vary slightly across life companies; but typically cover 75% of the first €350,000 of your earnings per annum (excluding benefit-in-kind), less state disability benefit if applicable, subject to an overall maximum of €262,500.
What income counts?
Income must be earned income, so you cannot include rental income or dividends for example. It is important to get this information right during your application for Income protection, as you might be paying for more protection than you are entitled to at the claims stage.
How does the premium tax relief work?
The premiums you pay on your income protection policy attract tax relief at your marginal rate. Let’s say you earn €60,000 per annum and your marginal tax rate is 40%. Your quote comes out at €100 per month (gross) but the policy actually only costs you €60 per month (net).
Should I choose guaranteed or reviewable premiums?
Our quote system allows two rate options: (1) Guaranteed rates (2) Reviewable rates. The Guaranteed rates option will ensure that your premium will not change during the term of the plan (unless inflation protection is chosen). Reviewable rate policies will start at cheaper but will be reviewed on the fifth anniversary and every five years thereafter, meaning increases may or may not occur.
What is meant by the deferred period?
The deferred periods are 4, 8, 13, 26 and 52 weeks. The deferred period is the time between when you are injured or fall ill and when the policy will commence payment. The longer the deferred period, the lower the premium. Think about how long your savings, or if applicable your employer provider sick pay would cover for expenses when deciding on the deferred period to choose.
How does occupational risk come into it?
When getting an income protection quote, your occupation is very important as some occupations will not be covered due to the nature of their work. Below is a table that will give you a good idea of what class your occupation falls into but it is not the definitive guide as there are some small differences between the various life companies.
Class 1
White-collar occupations: no appreciable accident or health risk. These occupations will usually be office-based. Examples include: Accountants, GP’s, IT Consultant, Solicitors, Administrators, etc.
Class 2
Mainly white-collar, predominantly administrative. Driving may be involved. Examples include: Quantity Surveyor, Dentist, Sales Rep, etc.
Class 3
Skilled occupations, which may involve light manual duties but any heavy lifting is rare. Examples include Interior Decorators, Foremen, Electrical Engineers, and domestic Electricians, Nurses etc.
Class 4
Skilled tradespersons, working on construction sites using light power tools. Examples include Carpenters and Plumbers.
How many times can you make a claim?
You can submit claims on your Income Protection policy as many times as you require benefits, right up to the end of the policy term.
Can I also protect my pension contributions?
Pension contribution cover is only available on executive income protection plans for company directors subject to a limit of €40,000 per annum.
What happens if my salary increases?
Some companies, such as Friends First and Royal London, have an automatic benefit on their policies which allows you to increase the cover on your policy by a certain amount (20% of the original cover every three years) without having to provide evidence of health. This is optional. The premium will be revised accordingly at the time. This option may be exercised up to five times. If the increase is declined more than once when offered, it will not be offered again.
You can also select Inflation Protection when running your quote. This means that your benefit will increase by 3% each year and your premiums by 3.5% in conjunction. This can help ensure that your benefit automatically stays in line with any salary increases and with inflation and that if a claim occurs your benefit payout will also increase by 3% per annum.