Income Protection for the Self Employed
When you’re self-employed you get the reward of being your own boss. That’s not always a good thing you don’t have any of the traditional employee benefits like company sick pay.
You and I have a lot in common we are self-employed. It is great HOWEVER we carry all the risk we have no safety net ☹
Getting Income protection is one step you could take to provide a financial safety net. It is my safety net I would not be without it.
Income protection is essential. Quite frankly if you don’t have it and you are dependent on your income, you’re up the creek without a paddle.
Income protection insurance is a helping hand that pays you up to 75% of your salary each month if you’re ill or injured and can’t work. It’s meant to replace some of your lost earnings, helping you pay the bills and carry-on living life as normally as possible. So, you can focus on getting better and going back to doing what you do best.
The average period for an Income Protection claim is just under 6 years – would you be able to continue to meet your financial commitments if you were unable to work for that length of time?
Choosing the cover
You can cover up to 75% of your earnings, less the personal rate of social welfare illness benefit (if you are entitled to it) up to a maximum of €262,500 per annum.
If cost is an issue, you don’t have to cover the full amount, even a little cover is better than none.
How does Tax Relief on Income Protection Work?
You can claim Tax Relief on premiums paid for Income Protection at your marginal (highest) rate of tax, up to a yearly limit of 10% of your total annual income. This can significantly lower the net cost of your Income Protection policy.
Ok so you have read this incredibly boring piece on Income protection but admit it I have gotten you thinking. I’d bet money on it you have questions or reasons why it’s a bad idea.
Here are some of the arguments I hear every week!
I can’t afford it
Can you afford not to have it? You may not be able to afford the full amount now, but you can afford some cover and don’t forget you get tax relief on it.
Insurance is a swindle it never pays out!
Wrong! Here is a statistic from Royal London one of our main providers
In Ireland in 2021, we paid 99.2% of all claims, totalling over €43.4 million in claims pay-outsRoyal London
“A 35-year-old customer was diagnosed with a terminal brain tumour, just one year after taking out their Royal London policies. They had a Specified Serious Illness policy with €120,000 cover and made a claim. They were a non-smoker and had no family history of cancer. While we assessed the claim, we realised that they could also claim on their Income Protection and Life Cover policies. We contacted them to start this process too. The Income Protection policy paid out a monthly income, while the full Life Cover of €120,000 was paid under the Terminal Illness Benefit. While obviously an incredibly sad situation for a young person to get this diagnosis, it was some relief to have the financial security to make the most of the time they had.”
Next is a personal story from someone who contacted us to get Salary protection organised for her husband.
“All I can say is thank God I took out salary protection, I remember thinking at the time “will I bother or wait till I’m 40+” It’s without a doubt the most important thing I did now, such a weight off my shoulders. I’m 34 and have stage 3 bowel cancer. You have no idea the relief I feel having it. I think the financial fear of not having the money to pay mortgage, car insurance, bills etc. would have weighed heavier on me than on a stage 3 cancer diagnosis.
It meant I could forget about work and focus on my treatment. Hopefully when I finish treatment it will mean I won’t be in a mad rush to get back and can focus on trying to rebuild my body and mind without the financial fear for a few months.
I set it up back when I was around 24, and honestly thought I was way too young to have it and maybe I could hold off and spend the money on nights out 🙈 but something in my gut decided to go with it”Client Story
We are so glad she listened to her gut.
Main reason for not paying out
The most common reason for a life insurance claim being unsuccessful is due to non-disclosure. This means omitting something at the point of application.
If upon your claim it’s deemed the information you provided wasn’t 100% truthful, the provider has the right to decline a pay out, highlighting the need to be open and honest when arranging cover.
It’s a common misconception that life insurance companies will try to find holes within your application as a means of declining the pay–out – this is not the case.
The reason non-disclosure will become apparent is if your cause of death or reason for been out of work was because of a pre-existing medical illness you were aware of BUT you didn’t mention or forgot about.
This highlights the need to ensure you provide as much truthful, relevant information at the point of application. If in doubt tell us I promise, there is nothing we haven’t heard!
I have been refused before/I have a pre-existing condition
Let’s be honest here if you have diabetes like myself, you’re not going to get income protection. If you’re on auto immune drugs for Crohn’s, arthritis etc. you more than likely will be declined also.
If you’re on medication for stress/anxiety/depression, you will have an exclusion on your policy, what does that mean? You will be covered for everything else except stress, anxiety etc.
Income Protection providers in Ireland and use them all
- Royal London
- Irish life
- New Ireland
Each company has different offerings so please get advice before you buy. If you need help, we would be glad to help but bottom line here is GET INCOME PROTECTION I DON’T MIND WHERE JUST GET IT.
If you’d like a chat, you can schedule a call here.