By JOHN ELLIS
Financial Advisor
THE money you earn pays for almost everything you have, mortgage, gas, electric, phone, food, children’s education, car, holidays, insurance, pension, home repairs, the list goes on.
You probably don’t think twice about insuring your home, car or healthcare but what about your income?
Thirty-six percent of those recently surveyed think their salary is protected by other insurance eg. Mortgage Protection, Loan Repayment Protection and Critical Illness cover.
But less than 10 percent of us have any form of private salary protection.
Imagine if you were lucky enough to have savings, for example €50,000 but that would last you just 17 months based on monthly outgoings of €3,000.
Fortunately, there’s a way of ensuring that in the event of an injury or illness that leaves you unable to earn an income, your financial commitments will be met and your lifestyle protected.
Income Protection, a form of disability/sickness insurance, can help you stay on top of the bills that matter, even if you were unable to work for three months or more due to illness, injury or disability.
With Income Protection, you take control of your financial security. By paying a monthly premium, which is determined by your employment and health status, you will receive a regular income for the complete duration of your illness until you return to work or retire.
How much does it cost?
The cost of an Income Protection plan depends on the option you choose, your age, occupation and health. It is very easy to fit a plan into your budget that you can review as your circumstances change. Here are two examples
Example 1
Philip is a Civil Engineer currently earning € 50,000 per year and is 30 years old.
He has chosen to protect 50% of his salary i.e. € 25,000 per year until his retirement age of 65.
He selects a 6 month waiting time and chooses to index link his premiums.
Benefit amount
€ 25,000 (or € 481 per week)
Gross premium
€ 46.97 per month
Philip pays
€ 28.18 per month*
*after tax relief based on 40%
Now consider this….
If Philip were to claim on his policy in two years’ time (aged 32) and his claim lasted for the
average duration of 5.5 years, he would be paid over €156,259 in benefits.
If he were unable to return before retirement, then over that 35 year period he would be paid
a total benefit of €1,460,000.
Example 2
Fiona is a 35 year old Sales Representative currently earning € 72,000 per year.
She has chosen to protect 50% of her salary i.e. € 36,000 per year until her retirement at age 65. She selects a 6 month waiting time and chooses to index link her premiums.
Benefit amount
€ 36,000 per annum (€ 692 per week)
Gross premium
€ 77.05 per month
Fiona pays
€ 46.23 per month*
*after tax relief based on 40%
Now consider this….
If Fiona were to claim on her policy in two years’ time (aged 37) and her claim lasted for 5.5 years, she would be paid over €224,000 in benefits.
If she were unable to return before retirement, then over that 28 year period she would be paid a total of €1,639,636 in benefit.
In each example they both get the protection of a regular income during difficult times, tailored to their needs and circumstances.
It is flexible, customisable and packed with features.
