# Income Protection, Serious Illness or both?



## sinbadsailor (22 Feb 2008)

As a sole ltd company director, working for myself I want to get some protection on income. Are Income protection and Serious Illness too similar to get both or is there merit in having them both?


----------



## RS2K (22 Feb 2008)

An ideal way from an economic and tax efficency standpoint is to set up a 1 person group PHI scheme.

The Co. can pay premiums, & claim them as a tax deduction against profits. No tax implications for the employee/director.

Treated is exactly the same way as a Co. pension arrangement.

I'm not a huge fan of S.I. policies. Never was. My view is that with properly structured Life cover (your Co. can pay for this on your behalf - called D.I.S.), PHI, and health ins (Vhi etc.) in force (all of which can enjoy tax benefits) is there a real need for it?


----------



## Marathon Man (29 Feb 2008)

If you pay Critical Illness through the company, it is tax deductable. 

BUT if you then claim, the proceeds are payable to the company, not you, and tax and PRSI will have to be paid on the proceeds when paid out to you.  In your position, there is no point in having the proceeds paid to the company.
If you pay through salary deduction, the proceeds are payable, gross, to the employee.

If you take out CI, don't do it through the company. Lightning does strike!


----------



## Bedlam (9 Oct 2008)

Hi 

What is the recommended level as a multiple of salary that one should have for serious illness cover?

Thanks


Beldlam


----------



## G123 (9 Oct 2008)

sinbadsailor said:


> Are Income protection and Serious Illness too similar ...



They are totally different. In my experience many tied agents don't have access to Income Protection so push Critical Illness as a viable alternative.


----------



## LDFerguson (9 Oct 2008)

Income Protection (IP) and Specified Serious Illness (SSI) cover are different in a number of fundamental ways: - (1) SSI pays a lump sum if you are diagnosed with one of a list of specified conditions.  If you get a condition that’s on the list, you get a lump sum; if you don’t, you don’t.  IP on the other hand pays you an ongoing income if you are unable to work due to ANY illness or accident.  There’s no fixed list of qualifying illnesses – if it’s serious enough that in the opinion of your medical doctor and the insurance company’s you’re unable to carry out your own job, it’s likely to be a claim.  As such, IP covers you for a far wider range of potential illnesses.  

It’s also worth mentioning that IP premiums qualify for tax relief while SSI premiums don’t.


----------



## LDFerguson (9 Oct 2008)

Bedlam said:


> What is the recommended level as a multiple of salary that one should have for serious illness cover?


 
No straight answer to that.  If you already have Income Protection and Health Insurance (VHI etc.) then I'd say enough Specified Serious Illness cover to clear off all your debts.  If you don't have Income Protection, you should have extra SSI to compensate.


----------



## 8till8 (9 Oct 2008)

I'm just looking into Income Prot and there are two options; guarantteed (everything stays same)and reviewable (price and benefits reviewed every 5yrs)......confused about which is best?


----------



## LDFerguson (9 Oct 2008)

If both quotes are Friends First, the difference is that with the reviewable one, you're taking the chance that Friends First may put up the cost of your cover at the review.  So it might or might not end up being dearer in the long run, even though the premium is cheaper to start with.  There's no way of knowing.  

If the guaranteed cover is Friends First and the reviewable one is Irish Life, there are some differences in cover, e.g. Irish Life require you to inform them of changes in occupation and might review or withdraw cover then.  Friends First don't.


----------



## G123 (9 Oct 2008)

I actually believe that the Irish Life Cover is not directly comparable to the Friends First cover on price alone. 

Ask your adviser to point out the salient differences here.


----------



## LDFerguson (10 Oct 2008)

G123 said:


> I actually believe that the Irish Life Cover is not directly comparable to the Friends First cover on price alone.


 
I agree.



LDFerguson said:


> If the guaranteed cover is Friends First and the reviewable one is Irish Life, there are some differences in cover...


----------



## Helen (9 Jan 2009)

RS2K said:


> An ideal way from an economic and tax efficency standpoint is to set up a 1 person group PHI scheme.
> The Co. can pay premiums, & claim them as a tax deduction against profits. No tax implications for the employee/director.
> Treated is exactly the same way as a Co. pension arrangement.



I was led to believe the PHI premiums are not a valid expense against profits & the employee would have to pay tax on any premiums paid by the company. Can anyone clarify this?


----------

