Only between 12% and 15% of the working population have Income Protection Cover. Not to be confused with redundancy cover, Income Protection (also known as PHI) provides an Income if you cannot work due to illness or injury.
While some employers may pay sick pay for up to six months (after that you’re on your own), in a lot of cases employees who find themselves unable to work have to survive on the state benefit of €10,192. If you are self employed that reduces to nil.
It is worth considering what your current income pays for on a monthly basis:
- Mortgage
- Food Bills
- Electricity
- School Fees
- Insurance
- Pensions
- Loan repayments
This demonstrates the importance of your earnings and therefore the importance of Income Protection.
Income Protection is relatively cheap for most types of employment. For example a 35 year old office based worker, male can protect an Income of €40k for circa €35 per month (assuming tax relief at 49%, 26 week deferred period) to age 65.
That means that if you can’t work due to illness or injury your Income Protection will pay you an annual salary of €40,000 until normal retirement age of 65.
The average claim on Income Protection is 5 years and the most common types of claim relate to stress and back related injuries*