Income Protection

[eamonn]

Is income protection a good product or handy money for insurance companies/brokers. I have got monthly premiums based on for 3,6 and 12 months coverage by employer. My present employment only pays for 5 days while out sick. The policy is sold on covering 75% of salary but in actual fact the Social Welfare coughs up the first 200 every month, making the contribution from the insurance company more like 50%. Contributions are tax deductable so the premiums are effectively 42% less due to increase in tax relief. To date I have been extremely healthy and have hardly missed a days work in 15 years. I am 37 years old.

 

[ClubMan]

Like any insurance product income protection policies, cover and premiums vary so it's difficult to generalise too much.

 

[Marathon Man]

Yes, it is a handy money maker for Insurance Cos.

If you don't need it, it is a total waste.

However....if you do need it, it's a Godsend. If you don't have it and you do find that you need it, you are probably uninsurable at that stage -or, at the very least will be hit for significantly higher premiums.

It's a trade-off. If you absolutely *know* that you'll never need it, then don't bother.

With your employer only covering 5 days, and you probably have the "normal" debts too, then it's probably a good idea to have some cover.

To date I have been extremely healthy and have hardly missed a days work in 15 years.

Like the financial adds, past performance is no guarantee as to future performance. You have a good track record but that doesn't mean that something unexpected isn't round the corner.

 

[LDFerguson]

The policy is sold on covering 75% of salary but in actual fact the Social Welfare coughs up the first 200 every month, making the contribution from the insurance company more like 50%

This isn't quite right. The Social Welfare Benefit for disability is roughly €200 every week. This works in your favour, as you only need a policy for 75% of salary, less the Social Welfare Benefit. The premium for this will be lower than if you insured for a full 75% of salary.

 

[browser]

I thought that the Disability benefit was means tested, so would the fact that you have say €300 per week coming in off an INcome protection policy not disqualify you from claiming the €200 or so Disability benefit?

 

[LDFerguson]

It's not means tested unless you have insufficient PRSI contributions. So for most PAYE workers you can get an Income Protection claim and the State benefit. See here.