Citywide Financial is often surprised by how little we're asked about income protection. While insurance packages like mortgage protection and family protection form the cornerstone of an individual's financial plan, income protection is often overlooked. We would argue this is a mistake.
A sudden and unexpected loss of income can expose a family to financial hardship. A person's income pays for everything from the mortgage to insurance premiums to day-to-day expenses. Therefore, losing this vital source of revenue can have an extremely detrimental effect on a family's quality of life.
Income protection is designed to mitigate the adverse financial effects of income loss.
Despite the clear advantages of income protection, many people are unsure what kind of income protection they need and even if they qualify for income protection. These questions are particularly salient to those who are self-employed or perhaps work irregular hours. In today's blog, we hope to answer individuals' pressing questions regarding income protection.
What is income protection
Let's get the basics out of the way first. Income protection is an insurance package designed to cover lost wages if an individual cannot work due to illness or injury. Income protection fills the economic hole left by lost earnings. Income protection is paid out monthly and covers the financial cost of losing your income.
How do income protection premiums work?
To put it simply; income protection premiums are paid while the individual is working. If they fall ill or get injured and cannot work, income protection is paid to them every month. During this period, the individual does not pay income protection premiums. However, they will begin to pay income protection premiums again when they return to work.
I'm self employed can I access income protection
Income Protection for the self-employed acts in exactly the same way as income protection for those employed by a company. If you get sick or suffer an injury and cannot work, you can begin to receive income protection payments every month. These income protection payments start after the agreed-upon deferred period.
What is the deferred period?
When signing up for an Income Protection policy, the policyholder agrees to a deferred period. This is the period of time from when the person is unable to work until the time that the benefit begins to be paid. The deferred period options are 4 weeks, 8 weeks, 13 weeks, 26 weeks and 52 weeks.
How long should my deferred period be?
When choosing your deferred period, it's best to ask yourself questions like how long can you cover outgoing expenses without a wage. It's worth remembering that the shorter the deferred period, the higher your monthly premiums. So we always recommend selecting the longest differed period possible while ensuring you have the finances to cover your expenses. Our brokers can help you work out this period.
Can I insure 100% of my income?
No, you can only insure up to 75% of your income. However, it should be noted that your income isn't just your wages; state supports like child care benefits are also included in your monthly income assessment.
Why can I only insure 75% of my income?
By only insuring 75% of your income, it's considered an incentive to return to work as soon as possible.
How do I go about applying for Income Protection?
To make sure you get the best possible income protection, we highly recommend contacting our offices today—our team of insurance experts work closely with all of Ireland's major insurance companies. Using your information and taking into account your family's needs, we can get you the best possible income protection for your unique requirements.