From dealing with clients and the public I have noticed that there is a lack of awareness about certain protection products in the market currently. This blog aims to discuss what income protection is and the importance of insuring your most important asset. Our goal at SYS Group is to provide client focused bespoke advice on various protection plans, designed to deliver financial peace of mind and which are readily understandable.

Providing you with financial peace of mind

Tony, our CEO has coined the phrase, “protect the present and plan for the future”, which reinforces the importance of protecting you and your family here in the now and through pension and estate planning for the future.

During these uncertain times, most people are concerned about their income and how this might be affected by the Covid-19 pandemic. According to recent Department figures there are circa. 480,000 people in receipt of the Pandemic Unemployment Payment (PUP). We insure our homes, cars and businesses but too few of us think about insuring one of the most important assets we have – our salary.

Protect your assets

Your income is one of your most valuable assets. It governs the way you and your family live. Would you and your family be able to survive on the State Illness Benefit of circa. €200 per week and pay the mortgage and all the bills associated with day-to-day expenditure?

Furthermore, if you are self-employed you may not even qualify for any State Illness-benefit. Salary / Income protection provides you with a replacement income if you are unable to work due to accident or illness.

Insuring your salary

The aim is to provide you with a financial cushion that pays you regular income to safeguard your financial well-being. These payments are intended to reimburse you until you are deemed fit to return to work and, in some instances, could continue to retirement age.

The maximum amount you can insure your income for is 75% of your annual salary less the State Illness Benefit which is currently c.€10,000.

There is a ‘deferred period’ from when the payment will begin and this period ranges from 4 to 52 weeks, the shorter the deferral period, the higher the premium. So, if you worked in the public service you would have a deferred period of around 26 weeks which means if you are unable to work and medical evidence supports this, your claim would be payable. e.g. if you have sick pay (Public Sector) through work for 6 months, then your income protection policy should work in conjunction with this and should have a 26 week deferred period. In that way your income protection will commence just after sick pay entitlement expires. Obviously. If you’re self-employed, you’re going to need a shorter deferred period, to trigger payment earlier.

As we have said already income protection makes financial sense by protecting and insuring yourself as an income earner.

Taking care of you and your family

Income Protection provides unrivalled cover to anything else available on the market. The insured party is protected against accident, injury and both mental and physical health.

Another advantage of Income Protection is that you can claim tax relief on income protection at your marginal rate. This means you can get up to 40% back on your premiums. You will still pay income tax, PRSI, USC on the payout.

If you would like to hear more about this plan or discuss other areas of financial planning, please contact info@sysgroup.ie.