Income Protection

Income Protection

An Income Protection Plan is a simple tax efficient and inexpensive insurance designed to provide you with an alternative income should you suffer any illness, accident, injury, or disability, which prevents you from doing your job. This income is a weekly or monthly benefit payable after a deferred period of 13, 26 or 52 weeks payable usually until your normal retirement age.


Income Protection Plans are tax efficient in that you can claim tax relief on your premiums up to a max of 10% of your salary. For example if you are paying the marginal rate of tax of 41% and your monthly premium is €100 per month, the actual monthly cost to you is €59 per month as €41 per month is reclaimed by the government by you or through your payroll*.


If you are unable to carry out your normal occupation for a prolonged period due an illness or injury could you continue to meet commitments such as mortgage repayments, car loans, personal loans, medical bills, fuel, food and household bills? An income protection plan will alleviate these worries.


An income protection plan can pay up to 75% of your salary less the State Disability Benefit right up to your normal retirement age if you are unable to work as a result of accident, injury or sickness, subject to the terms and conditions of the policy.


If you are self-employed you are not entitled to the State Disability Benefit and therefore an income protection plan is even more important for you if your income ceases. We at Michael Hannon Financial Services also have access to a product which provides replacement income and mortgage repayment protection for a shorter term up to an upper limit for the self-employed too!


Michael Hannon Financial Services is an independent life and pensions broker and as such we research the market for the most suitable product which best suits our customers' financial needs and objectives.


* If your monthly premium is €100 per month or €1,200 per annum, this annual premium must be less than 10% of your gross annual salary to avail of full tax relief. E.g. if your salary is €50,000 per annum your annual contribution into an income protection policy must not exceed €5,000 pa and therefore the €1,200 you are paying will qualify for full tax relief.