So, what happens if we get sick or have an accident and this income stops? This is where income protection insurance comes in. Previously, this cover was known as Permanent Health Insurance (PHI).

What is Income Protection?

Income Protection insurance is a product that, in the event you are unable to work due to illness or accident, the insurer will pay you a replacement income until your retirement date. Most Financial Brokers recognise the importance of maintaining an income and recommend to clients that they have adequate replacement income in place, should they be unable to work. For a lucky few, their employer provides this salary protection cover. For most, they may end up reliant on modest state benefits. Indeed, for the self-employed, they are entitled to nothing and thus really need to arrange their own income protection insurance.

Is Income Protection the same as payment protection on a mortgage or other loan?

In a word, no. They are not the same product. Payment protection insurance (PPI) was a product that was offered by banks to cover repayments on a mortgage or loan. However, this cover usually only lasted for a year or so and had quite strict conditions attached. In fact, payment protection insurance had a very chequered history and was often sold to people who would never be eligible to claim. You may have seen the stories in the media that banks had been made to refund customers for mis-sold payment protection policies.

Income protection is completely different. It covers your income in the event of illness or accident, and the benefit is payable until you recover and can work again. If you don’t recover, it is payable until you reach your retirement age. In fact, the Irish state is supportive of people taking out income protection insurance. You get full tax relief at your highest income tax rate on the premiums you pay. This is one of the few ways left to get marginal rate tax relief on anything!

How much does it cost?

Like most products, it depends. The premium that you pay will depend on a range of factors such as;

• Your age
• Your occupation
• Amount of cover needed
• Your state of health
• Your choices in relation to a range of policy features, such deferral periods

Where do you start?

The best way to proceed is to contact your Financial Broker, who will explain the options available and prepare an income protection quote for you and because your Financial Broker provides fair market analysis and deals with all the product providers, they will find the best product for you at the lowest price available. You can then rest easy, knowing that at least your income is secure.