income protection insurance

I am paying €184.50 per month for income protection insurance through Friends Frist. This amount is to cover my salary of €3,000 per rmonth. Apparently, as I am a psychiatric nurse and not a general nurse, the policy is more expensive. However, now I am going part-time and my salary will only be €1,650 per month. I will hopefully be part-time for the next few years as I have two young children 4 and 6. I have no mortgage, no car loan, two investment properties and money in the bank from a house sale. My question is should I continue paying this insurance? Is it worth keeping it just in case. Presumably the company would only pay out my current salary of €1,650 per month. Would I find it difficult to get such insurance again - I'm 42. Any advice greatly appreciated.

Hi Elainem,

I am very familar with this product. Ideally you should contact a independent advisor on this. But one thing to note is you can only claim on 75% of your salary so if your salary will be halved over the coming years at that point you should reduce the benefit covered in line with your revised salary. Friendsfirst would then reduce the benefit and advise of a reduced premium due.. Personally I think its one of the best products someone could have.. seemingly 1 in 6 of us wil be out of work for more than a year so its good to know this product would cover the daily expenses you currently have on a daily basis.. So my answer is hold onto if you can....

Thanks for the advice, think I will definitely hold on to the policy. As far as I understand there is also tax relief on it. I've only had it since last year so haven't claimed this yet. The income protection policy doesn't kick in until after a year, as the health service pays full pay for six months and half pay for six months, and at the time it also made the policy a little more affordable. Thanks again.

Hi Elainem
I think your tax relief should have been deducted at source already.
Nicola

Personally I would think twice about taking out such insurance. The chances of you claiming on it given that your employer give you full pay for 6 months and half pay for 6 ar fairly small. How long does the insurance continue to be paid if you are long term sick?
With no mortgage and 2 investment properties and proceeds of a house sale in the bank - it sounds like the insurance salesperson sold you something you might not ever need. Just put the money in the bank each month instead.

I agree with GWM80 as I too am very familiar with this product, you need to let Friends First now your salary has changed which will alter the premium you pay, with regard to claiming your tax relief when you received your policy documents there would have been a contribution certificate included, you need to send this to the revenue you adjust your tax credits accordingly. If you can't find it give FF a call and they'll send you another one.
In response to irishlinks question the policy will pay out until you can go back to work or until whatever age it's written to normally 60/65.

If you work in the public sector is IMPACt's Income Continuance Plan available to you? It would probably be a lot cheaper.

Otherwise I tend to agree with Irishlinks.

I agree with Irishlinks, you are paying 2200 annually and have plenty of assets plus income protection built into your job. If your job pays out, does that not mean your policy may not pay out, read the small print, these policies are notorious for not paying out.

Put the money in the bank - at least that way, if you don't need it for an emergency, you'll have it to spend on a cruise when you retire. You have no major bills and you have some key assets, you are not likely to end up being homeless if you are off sick. I reckon the people advising you to hold onto it are brokers who make a great profit off these products. It's doesn't seem to be an essential insurance product for your circumstances