Protect Your Salary

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The main purpose of Wage Protector is to provide a regular income if you are unable to work for a period of time due to an accident or illness. It works when you cannot.

Who may it be suitable for?

Wage Protector is aimed more towards manual occupations such as construction workers, electricians, plumbers, mechanical engineers and the self-employed. These occupations may be classed as higher risk occupation categories meaning traditional Income Protection may be more expensive. Wage Protector is the more affordable alternative to Income Protection.

How is your benefit paid?

The income is paid from the provider directly to you, after tax, USC and any other relevant deductions.

How does it work?

It replaces 75% of your earnings for 24 months. To continue to claim after this time, a functional assessment test must be carried out to qualify for further benefit payments. The product is divided into two types of cover as follows.

Transitional cover

• Starting after your chosen deferred period, this pays you a replacement income if you’re unable to do your own job for 24 months.

• It gives you the chance to get back on your feet or prepare for an alternative job.

• Depending on the circumstances, after 24 months, you may be entitled to full disability cover.

Disability cover

• This applies if you’re unable to return to work due to significant illness or injury and you lose earnings because of it.

• You must pass a functional assessment test to qualify for this cover. This is a simple, easy-to-understand set of physical and mental ability tests.

You can claim tax relief on the premiums you pay at your marginal rate of tax.

*Sample quote from Aviva May 2022

Protect Your Salary

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The main purpose of Income Protection is to provide a regular income if you are unable to work for a period of time due to an accident or illness.

Depending on your employment type and circumstances there are some variations of this policy available. They include Personal Income Protection, Executive Income Protection and Wage Protector. You can claim tax relief on the premiums you pay at your marginal rate of tax. For example, if you are taxed at a 40% tax rate, on a €100 premium you will get €40 tax relief, with the cost to you being €60.

When focusing on Personal Income Protection, we sometimes hear the following comments;

“The state will see me through” – The state illness benefit is currently €208 per week (single persons allowance 2022) and if you are self-employed, you are not entitled to the state illness benefit.

“It won’t happen to me” – The average age of income protection claimants in one particular protection provider in 2021 was age 48, with their youngest claimant aged 22.

“I can rely on my savings” – The average duration of an income protection claim is 5 years meaning a savings pot of up to 5 years’ salary would be needed in order to cover a similar amount.

“I already have specified illness cover” – Income protection is designed to protect your earnings throughout your working life. If at any point you suffer an illness or injury, which stopped you from working, you would still have some form of income until you are medically fit to return to work or you reach the end of your benefit period. This is in contrast to Specified Illness cover which pays a cash lump sum should you suffer one of the illnesses covered by the policy. The most common income protection claims are for psychological issues and orthopaedic conditions. Whilst these conditions can stop you from working, they are unlikely to trigger claims payments from a Specified Illness policy.

Depending on the protection provider, some other benefits can include;

  • Partial Benefit - If you return to work earning less than before you may be eligible for a partial payment.

  • Hospital Cash Benefit - Daily replacement income if you’re in hospital for more than 7 days during the deferred period.

  • Relapse Benefit - Benefit will immediately restart if you return to work after a claim and have a relapse within 6 months.

Income Protection…is it necessary?

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If you were unable to return to work long-term due to an illness or from the after-effects of an illness, would it be possible for you to sustain your current standard of living? How long will your employer pay your salary if you are unable to work for an extended period?

What is Income / Salary Protection?  Income Protection is different to serious illness cover and is designed to provide people with income replacement in the event of serious illness or if they are unable to work for a prolonged period of time. It can also be called Permanent Health Insurance (PHI).

Who is it for?  It is particularly important for those who are self-employed or people who are not entitled to a salary while off work due to a medium to long term illness or disability.

Why would I need it?  If you had an ATM in your house which held more than €500,000 in cash that you could access monthly for your day-to-day expenses, would you insure it?

We do not always think about income and future earnings as an asset. It funds our lifestyle, mortgage/rent bills, children’s education, life in retirement etc. In turn we also do not realise that as one of our biggest assets, this needs to be protected or insured. We don’t hesitate to insure our cars, houses, pets but we rarely think to insure the one thing that pays for these items…our income.

Pros: It can cover up to 75% of your income, tax relief is available on premiums paid subject to specified limits.

Cons: Depending on age, occupation and medical history, the premium can be costly, but the tax relief can bring the cost down.

Executive Income Protection can be set up by an employer who wants to provide income security for key employees or directors. The cost of pension contributions can also be covered under this plan. One benefit for employers or business owners is that the premiums qualify as allowable business expenses so they can be offset against corporation tax.

Personal Income Protection is similar to Executive Income Protection and can be set up by individuals who pay the premium themselves and claim the appropriate tax relief personally.

Wage Protector is more budget-friendly and most suitable for more manual occupations or for workers in riskier jobs which may be more expensive to insure.