6 September 2021
By Roger Jones
roger@TheCork.ie
Earning money is a fundamental part of life. Some people may complain about getting up for work every day, but the truth is we need and would be lost without our jobs. What happens if our jobs and money are taken away unexpectedly. The past 12 months during the COVID-19 pandemic it has highlighted and presented many challenges for various households and businesses. No one knows what’s around the corner, and nobody is invincible. Many people have had to face unemployment, face sickness, and loss of job security all leading to financial issues. It is therefore not surprising that there is a huge increase in income protection policies for many Cork workers. Office workers at PRO SEO Cork make income protection mandatory for all their employees.
What is Income Protection Insurance?
Income protection insurance protects a worker by paying a sum of money on a regular basis if you are unable to work due to illness or disability. Income protection insurance doesn’t cover redundancy. To obtain a protection policy you must be self-employed or in full time paid work. The benefit money is paid only after you are not working in any job or unable to work in your own job. This is known as a deferred period. Once your policy is in place, you get to pick what deferred period you think is best suitable for you, this is generally 4 weeks, 13 weeks, 26 weeks, or 52 weeks.
Do you need income protection?
You may need income protection with the following:
- Have no ill-health pension protection
- If you are self-employed with no ongoing income if you are unable to work due to illness or a disability
- Have no other source of income
- Your employer pays little or no sick pay
- You cannot cover your expenses or replace the loss of income
- Have dependents who rely on your income
How do Cork Workers get income protection cover?
A policy can be obtained by taking out an individual policy or by joining a group scheme at the workplace. According to Low, for an independent policy, every insurance company will look for medical details. It is cheaper to join a group scheme as most insurance companies do not require as much medical information on employees through the group scheme in the workplace.
Income Protection for Self Employed
Income protection is essential for self-employed workers in Cork. Income protection will pay a self-employed person if they become ill, have a disability, or sustained an injury that will prevent them from working.
How much can you Insure?
With self-employed income protection, you can insure for up to 75% of your gross (pre-tax) earnings. You’re not obliged to insure the whole 75%. It is important to look at your expenses like food, mortgage, and bills to determine how much coverage you need? You are likely to need more cover with self-employment as there are many business expenses to think of such as renting a commercial property, commercial vehicle costs, and employee wages.
How much does Income Protection Cost in Ireland?
Costs depend on the following:
- Term of the policy
- The deferred period you choose
- Level of cover generally linked to a percentage of your income)
After these, the main factors of costs are health, job, family medical history, lifestyle, and age. Your premium of the policy will be affected by age. As you get older, the policy will cost more, and obtaining a new policy may have more exclusions particularly if you are in ill health or your job is being affected. Your premium on the policy can be affected by your job essentially as some jobs are riskier than others. An insurance company places every job into a class and for each class, there are different premium costs. Employees in classes 2, 3, and 4 usually pay higher premiums. Class 1 is the lowest risk jobs; they usually pay the lowest premium. Class 5 is considered high risk, and may even be refused a policy.
Class 1
- Computer programmer
- Accountant
- Chemist
- Barrister
- Bank official
Class 2
- Laboratory technician caterer
- Hairdresser
- Bookmaker
Class 3
- Vet
- Nurse
- Electrician
Class 4
- Plumber
- Farm worker
- Landscape gardener
- Garage mechanic
- Floor layer
Class 5
- Tree surgeon
- Garda
- Prison officer
- Miner
- Jockey
How much Income will you get?
When you take out an independent insurance policy, you can choose the amount that you want to be insured for. There is generally a max amount you can insure. The maximum amount you can claim will be stated on the terms and conditions. This is usually 66% or 75% of your earnings before you became disabled or ill, less any other income while out of work such as single persons social welfare illness benefit if you are entitled to it and sick pay. If you are insured through a group scheme, you get the proportion of earnings stated in the group policy, minus any other payments you get when out of work.
How Long does your Insurance Protection payment last?
Your payment stops with any of the following:
- You pass away
- You return to work
- The insurer’s medical officer may check your health condition from time to time, and then decide if you are fit to return to work
- You reach the ages of 55, 60, or 65 policies depending. This is known as “the benefit cessation age”.
What to consider when choosing an Income Protection Policy
- It is recommended to seek guidance and advice from a reputable income protection insurance advisor.
- Talk to a professional adviser. Income protection insurance is a specialist insurance that takes into consideration many factors and risks which include existing medical conditions, family circumstances, and lifestyle choices such as diet, smoking, and hobbies.
- Don’t always choose the cheaper policy. Some cheaper policies can tend to be very basic with extra risks offered as paid for add-ons.
- Always be honest when it comes to your medical history. All medical history will be checked by the insurer. All medical history will be checked by the insurer.
- Always take your time reading the policy, the small print on the application and the terms and conditions. always know exactly what is and isn’t covered under your policy.
- Over time your circumstances might change, so it is recommended that you look over your policy on a regular basis to make sure that you are fully covered for what you require.
