Update 2nd November - What is income protection?

Income protection provides a replacement income if you cannot work due to illness or injury after a certain period of time.

How it works …

·         You must be in full-time paid work as a self-employed person, an employee or a company director to qualify for income protection.

·         Your occupation, health status and age could also affect your eligibility for the cover.

·         As a company director or employer, you can also offer group income protection to your full-time staff.

·         Decide how much of your income you want to protect. This depends on your salary, your sick pay arrangements and the amount of money you need to pay your bills and maintain your lifestyle. You can insure up to 75% of your normal income up to a maximum benefit of €262,500, less any social welfare payments.

·         Decide when you want your income protection to start.  The time between the start of your sick leave and your first income protection payment is called your deferred period. You decide whether it should be 13, 26 or 52 weeks. For example, if your employer will pay you for 6 months, go for a deferred period of 26 weeks. The longer your deferred period, the cheaper the cost of your income protection policy.

·         Decide how you want to manage your payments

Your options …

Guaranteed Premium

·         Your premium level is set and does not change

·         Your benefit level is set and does not change

Reviewable Premium

• Your premium can be reviewed every 5 years, which will give you an option of an increase in premium or a reduction in benefit

Indexation

·         You can choose indexation on both of these options. This will make sure that your benefit increases as the cost of living goes up. Just remember, if your benefit increases, so will your premium.

Term

Decide how long you want to keep your income protection. Many people keep their income protection until they retire. But you can pick any age between 55 and 70.

What it costs

How much you pay each month depends on:

• Your age
• Your occupation
• Your health status
• Whether you are a smoker
• How much of your income you want to protect
• Deferred period

It won’t increase if you make a claim and you can claim tax relief on what you pay.        

We at MK Financial will take you through all of the above decisions and can then recommend the best plan to suit your circumstances.

If you’d like more information, please give Michael a call on 086 8440541 or email info@mkfinancial.ie.

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland