Everyone has heard of Income Protection but is it something we should all have or is it a luxury if you have spare cash? The thoughts of being ill or injured at some point in the future and being unable to work is quite daunting. Life unfortunately can be quite unpredictable, so best advice would be to be prepared. If you had to stop working tomorrow due to illness or injury would you be able to survive without your income? If the answer is no, then it is likely that you would need some level of Income Protection to replace your existing income.
Income Protection pays you a regular monthly income, replacing some of your earned income. Cover continues until retirement (usually 65) or until you return to work. The payments you make are eligible for income tax relief at your marginal rate of tax. However, if you do put in a claim on your Income Protection plan, your incapacity benefit will be treated as normal income and so is assessed for income tax, PRSI and Universal Social Charge.
Unfortunately, people oftentimes overlook or underestimate the importance of income protection.
Sometimes thought of as a luxury rather than as a necessity, Income protection is oftentimes neglected, often to the detriment of the client.
Citywide Financial Solutions have produced a blog that outlines why you need income protection.