For many of us, our income is our most important asset. Without an income, everything else becomes a struggle.

Although we focus on pensions, we’ll admit that Income Protection Insurance is more important to prioritise in some cases. Without a regular income, making your pension contributions will become difficult or not feasible at all.

Therefore, Income Protection should be your first port of call as you assess your finances.

A good analogy we borrowed from emero is that if you had a machine that printed money at the end of each month, would you insure it? The answer for most of us is yes.

Yet some of us have not insured our salaries. The very thing that most other aspects of our lives are dependent on.

Having an Income Protection policy in place allows you to cover a percentage of your salary up to a maximum of 75%. Although, in some cases, it may be sufficient to cover a lower percentage.

Your Income Protection policy will kick in should you be unable to work due to sickness, injury, or disability. The benefits will be paid once your deferred period has elapsed.

This deferred period ranges from 4 to 52 weeks.

How much does Income Protection cost?

The cost of your Income Protection policy will depend on several factors. Your occupation and its risk rating will be the dominant factor and will affect your premium. Other factors include:

  • Age
  • Health
  • Smoker stays
  • Sum assured

Another major benefit and attraction to Income Protection is tax relief. Whether you choose personal Income Protection or Corporate Income Protection, both have tax-efficient elements.

Personal Income Protection

The premiums are paid by you personally and you will be eligible for tax relief at your marginal rate. Therefore, if your premium is €100, after-tax relief the ‘real’ cost may only be €60.

Executive Income Protection

The premiums are paid through the company. They can then be treated as a business expense and offset against corporation tax.

The first step when considering Income Protection is assessing eligibility and getting a quote. emero offers access to a free quote engine.

The premiums are paid through the company. They can then be treated as a business expense and offset against corporation tax.

This allows you to compare the market among Ireland’s leading insurance companies.

As with anything in life, you can only truly specialise in one area. We provide in-depth information regarding pensions.

If you are looking for advice on Income Protection or Life Insurance in general, emero  has a website packed with information and a team on hand to assist.

What are the next steps?

The first step is to assess your eligibility with regard to your occupation and what your monthly premium may be. From here you can work out the tax relief and decide if it’s feasible.

Following this, it is worth discussing your options with an insurance broker. We have highlighted emero who offers a streamlined process and give bespoke advice.

In many cases, we insure our pets, holidays, and cars but sometimes forget to insure what keeps the above afloat, our income.

On average, Irish households have savings of approximately €6,000. This is unlikely to last you more than a couple of months if you are without a salary.

Take some time to consider your options and protect your most valuable asset.

Your future self may thank you for it.

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*This blog should be used for information only and not taken as financial advice.

Assumptions

When calculating our figures, in the interest of simplicity, we decided to leave out some aspects that should be accounted for. If you organise a consultation with our team, at this point these aspects will be taken into consideration. Some of these include:

  • Inflation rates
  • Fund growth/performance
  • State Pension of €12,912 per annum
  • Contribution and annual management charges
  • Life expectancy (85 was used in this blog)
  • Tax relief on pension contributions

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