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Income Protection |
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061 448420 | |
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A recent survey carried out by Friends First / Lansdowne Market Research has shown that ONLY 10% of the Irish workforce has any form of Salary protection.
One in Six of Irish workers will be out of work due to sickness or disability for more than six months over the course of their working life and there is no obligation on your employer to provide sick pay on your behalf.
Remember, if you are Self-Employed then you are not entitled to any benefits.
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At GK Wealth Management Ltd., we feel that this is an area of huge importance that is being virtually ignored by most individuals. Insuring your regular income should be considered as a valuable and vital asset to have in place for both your family and yourself.
An Income Protection or Permanent Health Insurance policy is designed to replace part of your income should you be out of work.
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We don’t usually think of our current income and our future earnings as an asset!! |
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What arrangements do you have if you are on long term sick leave? |
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How long would your savings last if you were to draw on them every month to cover the cost of day to day living |
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If you are Self-employed, a Director or an employee,
protecting your income is of vital importance.
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Income Protection offers you financial security for yourself and your family if you are unfortunate enough to be out of work because of any illness, any injury, any disability or any accident resulting in you being unable to work for longer than your deferred period* and suffer a loss of earnings as a result. *The deferred period can range in weeks from 13 to 26 or 52 weeks
GK Wealth Management wants you and your employer to look at possibility of providing a replacement income if one is unable to carry out one’s usual work due to any illness, any injury, any disability or any accident.
When choosing Income Protection, one may choose from the following options;
- Executive Income Protection – taken out by the employer on behalf of the employee
- Individual Income Protection – taken out by self-employed or PAYE individuals
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Both plans are similar and simple in nature and offer the following key features:
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Protect up to 75% of your income* |
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Premiums are guaranteed not to increase in the event of a claim |
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Cover is guaranteed to continue until retirement, even if you have multiple claims |
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You can claim tax relief at your marginal rate on premiums paid |
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An optional benefit is indexation of premium and benefit amount |
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Your premiums can be either guaranteed (will not change during the term of your plan) or reviewable (will stay constant for the first 5 years of the plan and subject to review thereafter) |
*The maximum benefit allowable is calculated as 75% of the first €125,000 of your earnings plus 50% of the balance on an Executive Income Protection plan (75% of the first €125,000 of your earnings plus 33% of the balance on Individual Income Protection), less State Illness benefit and continuing income. Both plans are subject to a maximum insurable benefit of €175,000 p.a. |
Some additional benefits under the Income Protection plan include:
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Guaranteed Increase Option - you may be able to increase your benefits at regular intervals without having to provide any medical information |
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Hospital Cash benefit - you can receive an income if you are hospitalised for more than 7 days |
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Overseas benefit - you will be covered as long as you are in the European Union or if outside the European Union we will pay benefit for 13 weeks in any 52 week period (to a total of 39 weeks) |
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If the Executive Income Protection plan is chosen, the monthly premium will be paid by the employer and the Employee will not be liable for Benefit-in-kind on this |
When considering Income Protection, it is beneficial to compare it against Critical Illness;
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INCOME PROTECTION |
CRITICAL ILLNESS |
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- Covers any illness, injury, accident or disability that prevents you from working
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- Pays a regular income until you are able to return to work or until the end of the policy term
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- Critical Illness will only pay a once off lump sum benefit
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- Claim tax relief at your marginal rate on Income Protection premiums
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- No tax relief available on Critical Illness premiums
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- Income Protection offers a multiple claim facility
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- Only one claim available from a Critical Illness policy
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What happens to you and your family if you are out of work for a prolonged period?
Social Welfare Benefit
If you out of work due to sickness or disability, the only possible income available will be the State Disability Benefit.
If you were fully dependant on this disability benefit, the benefit paid to you on an annual basis would be just €9,662 p.a.
Calculating the Premium - Worked Example
John is a Human Resources Manager on an annual salary of €50,000 basic who will be 39 years on his next birthday. Married with two small children, John’s normal retirement age is age 60. He would like to insure the following benefit;
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Maximum benefit possible – 75% of Salary |
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Pension contribution of 5% of his salary |
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Indexation to apply to the benefit insured |
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Guaranteed monthly premiums |
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Deferred period of 26,13 or 8 weeks |
Based on the criteria, the premium payable by John on a monthly basis would be €73.32 per month.
John has the knowledge that this monthly premium is fully tax deductible at his marginal rate of tax. |
