Income Protection Insurance Ireland

Protect your income if illness or injury prevents you from working

Your income supports your mortgage, household bills, pension contributions, family and everyday standard of living.

If an illness or injury left you unable to work for several months or several years, how long could you continue meeting those financial commitments?

Income protection insurance can provide a regular replacement income if you are unable to work due to illness, injury or disability and meet the conditions of your policy.

At Dooley Insurance Group, we provide income protection advice for employees, self employed professionals, company directors and business owners across Ireland.

We will help you understand how income protection works, what level of cover may be suitable, how long your deferred period should be and what exclusions, charges and conditions apply.

Request an Income Protection Review

What is income protection insurance?

Income protection is an insurance policy that pays a regular benefit if you are unable to work because of an eligible illness, injury or disability.

The benefit begins after an agreed waiting period, known as the deferred period.

Depending on the policy, payments may continue until you:

• Return to work
• Recover sufficiently to work
• Reach the policy cessation age
• Retire
• No longer meet the policy definition of incapacity
• Reach another limit stated in the policy

Income protection is designed to replace part of your earnings rather than provide a once off lump sum.

The exact amount, payment period, exclusions and claim conditions will depend on the insurer and policy selected.

How does income protection work?

When arranging income protection, you choose:

• The amount of income to protect
• The deferred period
• The policy cessation age
• Whether benefits increase over time
• Whether premiums are guaranteed or reviewable
• The additional policy features required

If you become unable to work due to a covered illness or injury, you submit a claim to the insurer.

The insurer will assess the claim based on the policy definition, medical evidence, your occupation, earnings and other relevant information.

If the claim is accepted, payments generally begin after the deferred period has been completed.

How much of my income can I protect?

Income protection policies can generally cover up to 75% of your earnings, less certain other income or State benefits.

The maximum benefit will depend on:

• Your earnings
• Employment status
• Existing income protection
• Employer sick pay
• State benefits
• Other continuing income
• The insurer’s underwriting limits

You do not automatically need the maximum level of cover.

The appropriate amount should be based on the income required to meet essential expenses and maintain a reasonable standard of living if you cannot work.

We can help you calculate a suitable level of protection based on your actual financial commitments.

What is a deferred period?

The deferred period is the length of time you must be unable to work before income protection payments can begin.

Common deferred periods include:

• Four weeks
• Eight weeks
• Thirteen weeks
• Twenty six weeks
• Fifty two weeks

The most appropriate deferred period will depend on how long you can continue receiving income from your employer, savings or another source.

If your employer provides three months of sick pay, a thirteen week deferred period may be suitable. If you have limited sick pay or are self employed, a shorter deferred period may need to be considered.

A shorter deferred period will generally result in a higher premium because the insurer may need to begin paying the benefit sooner.

How long does income protection pay?

The maximum payment period depends on the policy selected.

Some policies may provide benefits for a limited period, while others may continue paying until the policy cessation age if you remain eligible under the policy terms.

A claim will normally end when you:

• Return to work
• No longer meet the definition of incapacity
• Reach the maximum payment period
• Reach the policy cessation age
• Retire
• Die

The potential payment period should be checked carefully when comparing income protection policies.

Who should consider income protection?

Income protection may be particularly important for anyone who depends on earned income to meet regular financial commitments.

This can include:

• Employees with limited sick pay
• Self employed people
• Sole traders
• Contractors
• Company directors
• Medical professionals
• Healthcare workers
• Legal professionals
• Accountants
• Consultants
• Engineers
• Tradespeople
• Business owners
• People with mortgages
• Parents with dependent children
• People making regular pension contributions

The key question is not simply whether you are likely to become ill.

It is whether you could maintain your financial position if your income stopped for an extended period.

Income protection for employees

An employee may receive sick pay from an employer, but the amount and duration vary significantly between workplaces.

Some employers provide full salary for a period before reducing the payment. Others offer limited sick pay or no payment beyond statutory entitlements.

Before arranging income protection, you should confirm:

• How much sick pay your employer provides
• How long employer sick pay continues
• Whether the payment reduces over time
• Whether you are covered by a group income protection scheme
• What happens if you change jobs
• Whether other benefits continue during an absence
• What State benefits may be available

The policy deferred period can then be aligned with the point at which your employer’s sick pay ends or reduces.

Income protection for self employed people

Income protection can be particularly important for someone who is self employed.

A self employed person may have no employer sick pay and could experience an immediate reduction in income if illness or injury prevents them from working.

The business may also continue to face:

• Loan repayments
• Rent
• Insurance costs
• Staff costs
• Vehicle expenses
• Professional fees
• Tax liabilities
• Other fixed overheads

Personal income protection is intended to replace part of your personal earnings. It is not the same as business overhead insurance.

When arranging cover for a self employed person, we consider:

• Average earnings
• How income is documented
• Business structure
• Existing savings
• Financial commitments
• Suitable deferred period
• Occupation
• Policy cessation age
• Fluctuations in annual income

Clear evidence of earnings can be important when applying for cover and making a future claim.

Executive income protection for company directors

Executive income protection is arranged and paid for by a company on behalf of an eligible director or employee.

It may provide a replacement income if the insured person cannot work due to an eligible illness or injury.

Depending on the policy structure, executive income protection may also allow cover for certain employer pension contributions and other employment related benefits.

Executive income protection should be considered alongside:

• Salary
• Dividends
• Existing employer sick pay
• Pension contributions
• Company structure
• Benefit in Kind implications
• Policy ownership
• Tax treatment of premiums
• Tax treatment of claim payments

Company directors should obtain financial and tax advice before arranging cover through a company.

Income protection for medical professionals

Doctors, dentists, nurses, pharmacists, physiotherapists and other healthcare professionals depend on their physical and mental ability to perform demanding work.

An illness or injury may prevent someone from carrying out their specific clinical duties even where they remain capable of performing another type of work.

The policy definition of incapacity is therefore particularly important.

When reviewing income protection for a medical professional, consideration should be given to:

• Exact occupation
• Clinical duties
• Own occupation definitions
• Public or private sector sick pay
• Existing group schemes
• Deferred period
• Benefit level
• Policy exclusions
• Career changes
• Additional occupations

A policy should be based on the work you actually perform rather than a broad job title alone.

Income protection for business owners

The financial effect of a business owner being unable to work can extend beyond their personal income.

The business may depend on the owner for:

• Sales
• Customer relationships
• Technical knowledge
• Operations
• Management
• Access to funding
• Strategic decisions

Personal income protection can help replace part of the owner’s earnings, but the company may also need separate business protection.

This could include key person insurance, shareholder protection or business overhead protection, depending on the company’s circumstances.

What does income protection cover?

Income protection generally covers an inability to work caused by an eligible illness, injury or disability, subject to the policy terms and medical underwriting.

Cover is not normally limited to a short list of named illnesses.

A valid claim depends on whether you meet the policy definition of incapacity and satisfy the other policy conditions.

The policy documentation should clearly explain:

• The definition of incapacity
• Medical evidence required
• Exclusions
• Deferred period
• Maximum benefit
• Claim payment period
• Policy cessation age
• Rehabilitation requirements
• Return to work provisions

What is an own occupation definition?

An own occupation definition generally assesses whether you can perform the main duties of your particular occupation.

This can be important for people with specialist, technical, physical or clinical roles.

Other policies may assess whether you can perform a different suitable occupation or any occupation.

The wording varies between insurers and may be influenced by your occupation, health, age and the cover available.

The definition of incapacity is one of the most important parts of an income protection policy and should be understood before cover is arranged.

What affects the cost of income protection?

Income protection premiums can be influenced by:

• Age
• Occupation
• Income
• Health
• Medical history
• Smoking status
• Level of cover
• Deferred period
• Policy cessation age
• Benefit escalation
• Guaranteed or reviewable premiums
• Policy features
• Insurer underwriting

Someone working in a physically demanding occupation may pay more than someone working in a lower risk office based role.

A shorter deferred period and higher benefit will also generally increase the premium.

Guaranteed and reviewable premiums

A guaranteed premium is intended to remain fixed based on the original policy terms, unless the cover is changed or a contractual increase applies.

A reviewable premium can be reassessed by the insurer at specified times. This means the cost may increase even where your individual health has not changed.

Guaranteed premiums may initially cost more but can provide greater certainty.

The right option will depend on your age, budget, expected length of cover and the terms available from the insurer.

Income protection tax relief in Ireland

Premiums paid personally to an approved income protection or permanent health benefit policy may qualify for income tax relief, subject to Revenue rules.

Revenue currently limits the qualifying premium to 10% of total income for the relevant tax year. PRSI and USC relief do not apply.

The tax treatment of employer contributions and claim payments can differ depending on how the policy is arranged.

Current information should be checked before relying on a particular tax treatment. Revenue income protection guidance

Income protection and serious illness cover

Income protection and serious illness cover provide different types of financial protection.

Income protection pays a regular replacement income if you cannot work and meet the policy definition of incapacity.

Serious illness cover pays a once off lump sum if you are diagnosed with an illness specifically listed in the policy and meet its definition.

A person may qualify for one type of claim but not the other.

Income protection is designed to protect ongoing earnings. Serious illness cover is designed to provide a lump sum following a qualifying diagnosis.

Depending on your circumstances, the two types of cover may be used together.

Income protection and life insurance

Life insurance pays a lump sum if the insured person dies during the policy term and the claim is valid.

Income protection is designed to support you financially while you are alive but unable to work due to an eligible illness or injury.

Life insurance protects dependants against the financial impact of death. Income protection protects against the financial impact of losing earnings during a period of incapacity.

Both may form part of a wider financial protection plan.

Reviewing existing income protection

An income protection policy should be reviewed when your income, occupation or financial commitments change.

A review may be necessary if you:

• Receive a salary increase
• Change occupation
• Become self employed
• Establish a limited company
• Change employer
• Gain or lose employer sick pay
• Take out a mortgage
• Have children
• Change pension contributions
• Approach retirement
• Stop smoking
• Reduce working hours

The review should confirm whether the benefit level, deferred period and policy cessation age remain appropriate.

Making an income protection claim

If you need to make a claim, you should contact the insurer or broker as soon as reasonably possible.

The insurer may require:

• A completed claim form
• Medical reports
• Confirmation from your doctor
• Evidence of earnings
• Tax returns or accounts
• Employer information
• Details of your occupation
• Information about other income or benefits

Claim payments will not normally begin until the deferred period has been completed and the insurer has accepted the claim.

Dooleys can help clients understand the claims process and the information required under their policy.

Why choose Dooley Insurance Group?

Dooley Insurance Group has supported individuals, families and Irish businesses since 1957.

Our financial services team provides advice across income protection, life assurance, specified illness cover, pensions, investments and business protection.

We review your earnings, sick pay, financial commitments and occupation before discussing the income protection options available through our agency appointments.

Our financial services team includes Conor Swan, QFA, RPA and SIA, Director, and David Renwick, Senior Financial Consultant.

With offices in Naas, County Kildare and Edenderry, County Offaly, we provide income protection advice to clients locally and throughout Ireland.

Income protection questions

What is income protection insurance?

Income protection insurance pays a regular replacement income if you are unable to work due to an eligible illness, injury or disability and meet the terms of the policy.

How much income can I protect?

Income protection can generally cover up to 75% of earnings, less certain State benefits and other continuing income.

When will income protection begin paying?

Payments begin after the selected deferred period has been completed and the insurer has accepted the claim.

How long can income protection pay?

Depending on the policy, benefits may continue for a limited period or until you return to work, recover, retire or reach the policy cessation age.

Is income protection tax deductible?

Premiums paid personally to an approved policy may qualify for income tax relief, subject to Revenue rules and limits.

Can self employed people get income protection?

Yes. Self employed people may arrange income protection based on their occupation, earnings, health and the insurer’s underwriting requirements.

Can a company pay for income protection?

A company may arrange executive income protection for an eligible director or employee. The policy structure and tax treatment should be reviewed carefully.

Does income protection cover redundancy?

Income protection is designed to cover an inability to work due to illness, injury or disability. It does not normally cover redundancy.

Does income protection cover mental health conditions?

Mental health conditions may be covered, subject to medical underwriting, policy definitions and exclusions.

Does income protection cover back problems?

Back and musculoskeletal conditions may be covered, subject to medical underwriting, policy definitions and exclusions.

Do I need income protection if my employer provides sick pay?

Employer sick pay may only continue for a limited period. Income protection can be structured with a deferred period that begins when employer sick pay ends or reduces.

What happens if I change jobs?

Your policy may continue, but a change in occupation, earnings or employer benefits should be reported and reviewed in accordance with the policy terms.

Is income protection the same as serious illness cover?

No. Income protection pays a regular benefit following an eligible incapacity, while serious illness cover pays a lump sum following diagnosis of an illness listed in the policy.

Are income protection payments guaranteed?

Payments are only made where the claim meets the policy definition and conditions. Cover does not guarantee that every illness, injury or period away from work will result in a claim.

Arrange an income protection review

Your ability to earn an income is one of your most valuable financial assets.

A suitable income protection policy can help protect your household, financial commitments and longer term plans if illness or injury prevents you from working.

Contact Dooley Insurance Group to arrange an income protection review.

The information on this page is general and does not constitute personal financial, legal or tax advice. Cover is subject to medical and financial underwriting, policy definitions, exclusions, terms and conditions. Tax treatment may change and depends on individual circumstances.

Dooley Insurances Ltd t/a Dooley Insurance & Mortgage Brokers and Dooley Insurance Group is regulated by the Central Bank of Ireland.