Income protection insurance is one of the most valuable forms of financial security available in Ireland. Life is unpredictable—accidents, illnesses, or unexpected health issues can stop you from working and earning a steady income. Without proper planning, the financial impact can be overwhelming. That’s where income protection comes in.
This complete guide explains what Income protection advice is, how it works in Ireland, who needs it, the benefits, tax relief options, and tips for choosing the right policy.
What is Income Protection?
Income protection (sometimes called permanent health insurance) is an insurance policy that provides you with a regular income if you cannot work due to illness, injury, or disability.
- It pays out a percentage of your regular income (usually up to 75%).
- Payments continue until you can return to work or until the end of the policy term (often retirement age).
- The money is tax-deductible, making it more affordable.
Unlike other short-term benefits, income protection gives long-term security, ensuring you can cover essentials like rent, mortgage, bills, and everyday living costs.
Why Income Protection is Important in Ireland
Many people underestimate how easily their income could be disrupted. In Ireland:
- State illness benefits are limited and may not cover your full expenses.
- Employers may only provide sick pay for a short period (if at all).
- Medical expenses can rise when you’re unwell.
- Loans, mortgages, and family commitments don’t stop just because your income does.
Income protection ensures financial stability during difficult times, so you can focus on recovery instead of money worries.
How Does Income Protection Work?
When you take out an income protection policy in Ireland, here’s how it usually works:
- Choose your cover amount – Typically up to 75% of your income.
- Pick a deferred period – The waiting time before payments start (often 4, 8, 13, 26, or 52 weeks).
- Make a claim if needed – If you’re unable to work due to illness or injury.
- Receive regular payments – Until you return to work, reach retirement, or the policy ends.
Key Features of Income Protection in Ireland
- Cover up to 75% of income (subject to insurer limits).
- Deferred periods give flexibility and lower premiums if you can wait longer before payments begin.
- Cover until retirement age (commonly 55–70 years).
- Tax relief of up to 40% on premiums (depending on your tax rate).
- No restrictions on how payments are spent – you decide how to use the money.
Who Should Consider Income Protection?
Income protection is particularly valuable for:
- Self-employed workers – no employer sick pay safety net.
- Employees without generous sick pay – state benefits may not be enough.
- Parents and homeowners – with ongoing bills, loans, and dependents.
- High earners – who would face a significant drop in lifestyle without protection.
Benefits of Income Protection
Here are the main reasons people in Ireland choose income protection:
- ✅ Peace of mind – knowing you and your family are financially secure.
- ✅ Covers long-term illness or injury – not just short-term sickness.
- ✅ Tax-efficient – premiums qualify for tax relief.
- ✅ Customisable – you can tailor cover to your income and needs.
- ✅ Supports recovery – focus on getting well instead of stressing over bills.
Tax Relief on Income Protection Premiums
One of the biggest advantages of income protection in Ireland is tax relief.
- You can claim back up to 40% of the cost of your premiums (if you pay tax at the higher rate).
- Relief is applied through Revenue, making the real cost much lower than the quoted premium.
Example:
If your premium is €100 per month and you pay tax at 40%, you effectively only pay €60 after tax relief.
Common Myths About Income Protection
Let’s clear up a few misunderstandings:
- ❌ “It’s too expensive.” – With tax relief and flexible options, policies are more affordable than many think.
- ❌ “I’ll rely on state benefits.” – Illness benefit is around €232 per week (2025), which is unlikely to cover living expenses.
- ❌ “It only covers extreme disabilities.” – Income protection covers most illnesses and injuries that prevent you from working.
- ❌ “My employer’s sick pay is enough.” – Employer schemes usually last a few weeks or months, not long-term.
Factors That Affect the Cost of Income Protection
The price of your policy depends on several factors:
- Your age – younger applicants pay lower premiums.
- Occupation – riskier jobs have higher premiums.
- Health and lifestyle – smoking or pre-existing conditions may increase costs.
- Cover amount – higher income replacement = higher cost.
- Deferred period – longer waiting periods reduce premiums.
How to Choose the Right Policy
When comparing income protection options in Ireland, consider:
- ✔️ Your budget – find a balance between cost and coverage.
- ✔️ Level of income cover – aim for 50–75% of your salary.
- ✔️ Deferred period – match it with your savings or employer sick pay.
- ✔️ Policy term – ideally up to your planned retirement age.
- ✔️ Insurer reputation – look for strong claims history and customer service.
- ✔️ Added benefits – some policies include rehabilitation support or hospital cash.
Alternatives to Income Protection
While income protection is one of the most comprehensive solutions, some alternatives include:
- Critical illness cover – lump sum if diagnosed with certain conditions.
- Mortgage protection insurance – pays off your mortgage if you die (but doesn’t replace income).
- Savings and emergency funds – helpful, but often not enough for long-term illness.
Practical Tips for Getting the Best Value
- Shop around and compare providers.
- Speak to a financial advisor for tailored advice.
- Take out a policy while you’re younger and healthier.
- Align your deferred period with employer sick pay.
- Review your policy regularly to ensure it meets your needs.
Conclusion
cheap income protection ireland is one of the most practical and tax-efficient forms of insurance available in Ireland. It ensures you and your family maintain financial stability even if illness or injury prevents you from working for an extended period.
By understanding how income protection works, exploring your options, and tailoring a policy to your needs, you can protect your most valuable asset—your income.
When planning your financial future, income protection should be at the top of your list.
