Income protection also known as Income Continuance, Income insurance, Permanent health Insurance. Confused yet!!!? I am going to go with the label of Income Protection on this one, purely because that is what it is designed to do……protect your income if yours stops!
Before we get into the basics of Income Protection, let’s picture the following. (Stick with me here)
Imagine for a second that you had a printer in the corner of you bedroom, every morning as you wake up you hear this printer printing out the equivalent of a days wages for you. Because there is no such thing as WORK in this dream land you survive on your printers ability to print this money for youevery morning. Having said that like all printers yours is prone to breaking down from time to time, indeed it is also susceptible to breaking down permanently. If it does your income will stop, cease, finish.Bearing in mind it is your sole source of income would you INSURE this printer against such an incident, bearing in mind it I your sole source of income? If you woke up one morning and it was all flashing lights would you feel it prudent to have a back up plan to help pay the bills?
On the face of it it it would seem like pure gambling to not do so, yet the fact is that a huge percentage of us do not a have such a plan in place. It would seem like the most sensible course of action. So why don’t people have this protection in place? Personally I believe there are a few core reasons why, cost, awareness and understanding of what it actually is! So here goes:
What is Income Protection?
It is a type of protection which should pay you an income if you are medically unable to work for a minimum period of time due to an accident, illness or injury.
So it is Sick Pay, Right?
No!…..Typically ‘’sick pay’’ from an employer is paid for a set period of time, for example 3, 6 or 12 months after which time the benefit stops and you are on your own. Income Protection however is designed to continue to provide the income benefit until either:
- You are deemed medically able to return to work..or
- Your protection plan reaches the end of its term, you can usually select between 55 to 70 years of age at which point the benefit stops.
How much Income do I get from my Income Protection Plan?
Depends on how much your printer prints each morning! You can protect up to 75% of you Gross income. When/If you do claim as a result of being unable to work, you make your claim, have it supported by medical evidence of you being unable to work, and the insurance company essentially become your employer and they deduct the tax payable and you get the net income paid into you bank account.
For Example: You are a 32 years of age, a Career advisor, non-smoker. Your income is €50k per annum. You put in place an Income Protection plan which will cover 75% of your income (€38k per annum benefit) You are married with one child. Your spouse is working also. If you were to become ill/injured/sick for a minimum of 1 week you could apply for state disability benefit, if successful it would provide in the region of €940per month.
Who can have it?
A lot of folks might want it but not everyone can get it. Typically anyone in an occupation which involved mostly driving or very heavy manual labour can have difficulty in getting an application though underwriting.
Likewise if you have previous medical history or medical/physical illnesses or conditions it may impact on you getting the cover at ‘normal rates’ which simply means at the price you were quoted for and covering you for all eventualities.
Conclusions?
If your income stopping would have a massive impact on you financial, physical or mental well-being then it would be a worthwhile. If you feel the state benefit would not be sufficient and you have few other crutches to support you should you be out of work for a considerable period of time then it would be worth considering….for sure!
Get yourself informed! Speak to us about your needs, circumstances, requirements by calling 057-9335955
