Income Protection (Permanent Health Insurance)
Providing you with an income if you cannot work as a result of an illness or injury.

Income protection is a type of insurance that pays you a regular income if you can no longer work due to an injury or illness.  It acts as a replacement for some of your earned income, so you can still maintain the level of lifestyle you are used to.  You can avail of an income protection plan if you are in full-time employment or are self-employed.  However if you do become unemployed for any reason this policy will not provide any cover for you.

If you happen to fall ill, your employer may pay you your full salary for a limited period of time but once this ceases you will more than likely have to rely on state benefits to keep you going financially.   In some cases this will not be enough to enable you to maintain you current standard of living and may also not cover your monthly outgoings.  Unfortunately the State benefits are not generous and you will more than likely see a significant drop in your income which could result in further strain being put on your health, but mental and physical.

Some employers arrange group income protection insurance for their employees as a perk of their job, which would pay out an income if you become injured or ill.  However, in these times it is a decreasing benefit offered by employers and may be worth your while looking into getting your own personal cover.  This cover will offer you a great peace of mind in very stressful times.

Income Protection Plans aim to put you back into a position similar to where you were before you suffered from an injury or illness. However, it does not allow you to make a profit out of your misfortune.

Here in Vision Financial Solutions Limited one of our financial advisors will help you to decide how much cover you need.  The cover will reflect your income and the benefit you received will be set at a level which makes you no better off financially.  This is to encourage you to return to work once you are able.  In general, the most cover you can have at any one time (including that provided under other income-protection plans and continuing income from your job or pension is:

• €250,000 a year; or
• 75% of your total yearly earning;
• less any state benefits for disability (expect benefits for children) and other forms of income you may have

Once your Income Protection Policy is set up you will be required to pay by direct debit either monthly, every three months, twice yearly or once a year.  The amount of which will depend on the following factors:

• Age - as the older you are the more likely you are to become ill
• Sex - on average, women suffer more ill-health than men and so pay more than men
• Occupation - Some occupations carry a higher risk of accidents and illness than others and it is easier to return to work after an illness or accident in some occupations
• Whether you smoke
• Your health - your overall heath at the time of the application.
• Lifestyle - whether you undertake any activities which would be deemed risky
• Your deferred period and the age at which your cover ends - your deferred period is the amount of time you wait until the payments of the policy begins

If by the unfortunate circumstances that you do need your Income Protection policy to pay out, the start of the pay outs will depend on what deferred period you had chosen.  The deferred period is the continuous amount of time you have to be off work due to an illness or injury before the insurance company will begin to pay the incapacity benefit.  Your deferred period can range between 13 to 52 weeks, depending on your job.  The payments will not come into effect until the deferred period has run out.  Payments will usually begin one month after the end of the deferred period.  

The payments you will receive will be treated as normal income and so is assessed for income tax, PRSI and the Universal Social Charge.  The insurance company will pay the benefit direct to you and will take any taxes in the same way as an employer would take them from your normal income.  You can however claim income tax relief on any payments into your plan. The payment will continue until:

• you return to work;
• you reach the age at which your cover ends;
• you die;
• the insurance company decides that you are fit enough to do your normal work; or
• you take up your own or another job and fail to inform the insurance company.

whichever happens first.

There are a few occasions where an insurance company will not pay out on a policy:

• If you have given incorrect information at any time or if you did not inform the insurance company something that would have affected the assessment of your application when you first took out the plan.  You must give all relevant information about your health and occupations on your application form.  If you do not give all relevant information and you make a claim, the insurance company may not pay out on your benefit.  You should check your application form carefully to make sure that you have answered all the questions accurately.
• If the injury or condition resulting in the claim was self-inflicted, caused by you taking alcohol or drugs, or caused as a result of you failing to follow reasonable medical advice.
• If the injury or condition resulting in the claim was caused y your taking part in what may be considered dangerous activities.
• If, at any time of a claim you are living outside Ireland or the UK.  In this case the will be a limit put on what will be paid out.

If, after a period of time you have been receiving the benefit, you feel you are ready to return to work on a part-time basis, you will still receive part of your benefit if the company is satisfied that you should not be working on a full-time basis.  It is important that you discuss any work opportunities with us or your insurance company.  Once you return to work the benefit will stop.  This payment will not affect the terms of your plan, and you policy will not be affected by the number of claims that you make.  If you have received incapacity benefit and within six months of returning to work you claim again as a result of the same injury or illness, the deferred period will not apply.  However, you much have started to make your regular payments again when you return to work.

If you would like any further information on Income Protection Policies, please do not hesitate to contact us.