Income Protection Insurance

Income Protection insurance is also called Permanent Health Insurance (PHI). If you have a long-term illness or disability and you can’t work, an income protection policy pays out a regular cash payment that replaces part of your lost income.

Income protection policies are not the same as private healthcare plans such as those provided by VHI, BUPA or VIVAS. If you are ill and need medical or hospital care, these plans pay your fees and costs (up to certain limits). They do not pay out any cash benefit.

Income protection plans do pay out a cash benefit, but only if you are unable to work due to illness. The cash is paid out as a regular income, on top of any other benefits you might be entitled to.

What benefits could I get if I become ill and cannot work?

If you have no insurance and you cannot work because you are sick or disabled, you may be able to get certain benefits from the State or from your employer.

Social welfare disability is a weekly payment you could get from the State. It is not available to the self-employed.

Some employers pay employer sick pay, by giving you part of your salary or wages for a time after you become sick or disabled.

An ill-health retirement pension lets you take early retirement with a pension if you become permanently unable to do your job. You may get this if you are a member of a group pension scheme.

Do I need Income Protection?

You may be entitled to get enough money to live on from sick pay, pension and social welfare payments. In this case, you may not need extra cover from an income protection policy. However, you may need this cover if:
  • you have little or no employer sick pay; or
  • you have no ill-health pension protection; or
  • you are self-employed.

Who can buy this insurance?

To get and continue to have income protection cover you must be in full-time paid work or be self-employed.
You can get income protection cover by:
  • joining a group scheme if one is available at your place of work; or
  • taking out an individual policy in your own name.

Who does this insurance cover?

Most income protection policies pay out a benefit if:
  • you are unable to work at your normal job because of illness or disability; and
  • you do not have any other job.

When do I get this benefit?

You get your benefit only after you have been unable to work at your normal job and are not working at any other job for a set period. This period is called the deferred period. You can choose from 13 weeks, 26 weeks or 52 weeks. If you choose 13 weeks it costs more than for 26 or 52 weeks because your benefit starts sooner.

How much benefit can I claim?

If you are insured through a group scheme, you get the proportion of your earnings stated in the group policy, less any other payments you get when out of work – such as social welfare disability benefit.
If you have an individual policy, you would get either:
  • the amount of benefit you want paid out if you have a claim (the insured amount); or
  • the maximum benefit allowed on the policy (if that is less than the amount you have insured).
The policy terms and conditions will tell you the maximum amount you can claim. It is usually 75% of your pre-disability earnings, less any other income you get while out of work such as sick pay or social welfare disability. So your maximum benefit could be less than your insured level of benefit depending on what other income you are entitled to get while you are out of work.

How long will I continue to get my benefit?

Usually payment of your benefit stops as soon as one of the following events happens.
  • you return to work;
  • you reach age 60 or 65, depending on the policy;
  • the insurer’s medical officer, who may check your medical condition from time to time, decides that you are fit to return to work; or
  • you die.