Life is full of unexpected events—injuries, illnesses, and economic shifts can suddenly interrupt your ability to earn a living. That’s where income protection comes into play. In Ireland, income protection insurance is an essential tool for safeguarding your financial future in the event of long-term sickness or injury. Whether you’re self-employed or working for a company, understanding how to secure your income is crucial.
This guide provides expert advice tailored to the Irish market, helping you make informed decisions about income protection and ensuring peace of mind for you and your family.
What Is Income Protection?
Income protection advice is an insurance policy that provides a regular income if you’re unable to work due to illness or injury. It typically pays out a percentage of your pre-tax earnings—up to 75% in many cases—after a deferred period.
Unlike other types of insurance, income protection is not a one-time payout. Instead, it offers ongoing monthly payments until you return to work or reach retirement age, depending on your policy terms.
Why Is Income Protection Important in Ireland?
1. State Benefits Are Limited
In Ireland, the Illness Benefit from the Department of Social Protection provides only a small amount weekly (as of 2025, the maximum personal rate is around €232 per week). This may not be enough to cover your mortgage, utility bills, and daily expenses.
2. Rising Cost of Living
With the cost of living increasing across Ireland, especially in cities like Dublin, Cork, and Galway, losing your income—even temporarily—can lead to significant financial strain.
3. Long-Term Illnesses Are More Common Than You Think
According to the Central Statistics Office (CSO), thousands of Irish workers are absent from work due to illness or disability each year. The probability of being unable to work for six months or more before retirement is higher than most people assume.
Who Should Consider Income Protection?
While anyone who earns an income can benefit from income protection, certain groups should strongly consider it:
- Self-employed individuals: With no employer benefits to fall back on, self-employed people face greater financial risk.
- Primary earners: If your household relies heavily on your income, a sudden loss could destabilise your family’s finances.
- Mortgage holders: Many banks require proof of income protection before approving home loans.
- People with limited savings: If you don’t have enough savings to cover at least 6–12 months of living expenses, you’re at higher risk in the event of income loss.
Types of Income Protection Policies in Ireland
There are several types of income protection plans available in the Irish market. Choosing the right one depends on your occupation, budget, and financial obligations.
Standard Income Protection
- Covers up to 75% of your income.
- Offers flexible deferred periods (typically 4, 8, 13, or 26 weeks).
- Premiums may be tax-deductible (up to 40% for higher-rate taxpayers).
Executive Income Protection
- Suitable for company directors and business owners.
- The employer pays the premium and receives the benefit if the insured cannot work.
- Tax-deductible as a business expense.
Group Income Protection
- Offered by some employers as part of their benefits package.
- Premiums are usually lower due to group rates.
- May not be portable if you change jobs.
Key Features to Look For in an Income Protection Policy
Choosing the right policy involves more than just comparing prices. Here are essential features to evaluate:
1. Deferred Period
This is the waiting time before the policy starts paying out. A shorter deferred period (e.g., 4 weeks) means faster support but higher premiums.
2. Benefit Duration
Check how long the benefits will be paid—some policies last until retirement, while others have a maximum term (e.g., 2 or 5 years).
3. Indexation
This allows your benefits to keep pace with inflation, so the real value of your income doesn’t decline over time.
4. Guaranteed Premiums
Some policies offer fixed premiums for the policy’s lifetime, while others can increase with age or inflation.
5. Own Occupation Cover
Ensure the policy covers your specific occupation rather than any job. “Own occupation” cover is typically more comprehensive.
Expert Tips for Choosing Income Protection in Ireland
Here are some practical steps to take when selecting your policy:
✅ Assess Your Monthly Expenses
Make a detailed budget to understand how much income you need to cover essential bills like rent, mortgage, groceries, utilities, and insurance.
✅ Compare Providers
Major Irish insurance providers offering income protection include:
- Irish Life
- Aviva
- Zurich
- New Ireland
- Royal London
Use a qualified broker or financial advisor to compare options.
✅ Look for Tax Efficiency
Income protection premiums are tax-deductible at your marginal rate. This can significantly reduce the net cost of your policy.
✅ Consider Employer Benefits First
Check if your employer offers any sick pay or long-term disability cover. If so, you may only need a top-up policy.
✅ Don’t Wait Until It’s Too Late
You must be healthy to get approved for income protection. Applying while you’re still fit and working reduces the risk of exclusions or premium loadings.
Common Mistakes to Avoid
When shopping for income protection, many people make the following errors:
❌ Choosing the Cheapest Option
A lower premium might mean fewer benefits, limited coverage, or exclusions that could hurt you in the long run.
❌ Ignoring the Deferred Period
Opting for a long deferred period can make premiums cheaper—but if you don’t have emergency savings, you might struggle while waiting for the policy to kick in.
❌ Not Reviewing Your Policy Regularly
Life changes—so should your policy. Review your coverage after major life events like getting married, having children, or changing jobs.
❌ Assuming You’re Covered at Work
Even if your employer provides cover, it might not be enough. Always check the terms and limits of your workplace policy.
How Much Does Income Protection Cost in Ireland?
Premiums depend on several factors, including:
- Age
- Occupation
- Smoking status
- Deferred period
- Benefit amount
- Policy term
For example, a 35-year-old non-smoker working in a white-collar profession could pay between €25 and €50 per month for a policy covering €2,000/month in benefits, depending on features and deferred period.
Tax Benefits of Income Protection
Income protection policies in Ireland offer significant tax relief:
- Up to 40% tax relief is available if you’re paying income tax at the higher rate.
- You can claim this relief through your annual tax return or request an adjustment to your tax credits.
This makes income protection not only a smart financial move but also a cost-effective one.
Final Thoughts: Secure Your Financial Future Today
Income protection in Ireland is more than just an insurance policy—it’s a financial safety net that can protect your lifestyle and give you peace of mind during uncertain times. Whether you’re a sole trader, employee, or company director, taking proactive steps today can help you avoid financial hardship tomorrow.
Quick Recap: Top Tips for Irish Income Protection
- ✅ Know your monthly financial needs.
- ✅ Compare policies from multiple providers.
- ✅ Choose “own occupation” cover if possible.
- ✅ Understand deferred periods and benefit lengths.
- ✅ Take advantage of tax relief.
- ✅ Review your policy regularly.
- ✅ Get professional advice tailored to your situation.
Need Help? Speak to a Financial Advisor
Navigating insurance options can be overwhelming, especially when it comes to the finer details of policies. Speaking with a qualified Irish financial advisor or insurance broker ensures that you choose the right product for your circumstances.
They’ll help tailor your plan, explain complex terms, and ensure you understand the pros and cons of each policy—so you can make confident, informed decisions.
