When it comes to financial protection, most people immediately think of Life Assurance. It’s a standard requirement when taking out a mortgage, and the idea of leaving a family financially stranded is a universal fear.
However, if you look at the statistics, Life Assurance is arguably the wrong first priority for most working professionals in Ireland. The real threat to your financial stability isn’t death—it’s illness.
The Statistical Reality
According to industry claims data in Ireland, a 35-year-old is significantly more likely to be out of work for six months or more due to illness or injury than they are to pass away before retirement age.
Yet, while many people happily pay €30 a month to insure their phone or laptop, they leave their most valuable asset completely unprotected: their ability to earn an income.
If you earn €60,000 a year and have 25 years left until retirement, your future earning capacity is €1.5 million. If an illness stops you from working, how long could you survive on your savings or the state illness benefit (which is currently just over €230 a week)?
What is Income Protection?
Income Protection is an insurance policy designed to replace up to 75% of your regular income (less the state illness benefit) if you are unable to work due to any illness or injury.
Unlike Specified Illness cover—which pays a lump sum for a defined list of severe conditions like a heart attack or stroke—Income Protection covers any medical reason that prevents you from doing your job, including mental health issues and back injuries, which account for the vast majority of long-term absences.
The Tax Advantage
One of the biggest misconceptions about Income Protection is the cost. Because the government recognizes the importance of this safety net, Income Protection premiums are tax-deductible at your marginal rate.
If you are a higher-rate taxpayer (paying 40% tax), a policy with a gross premium of €100 a month will only actually cost you €60 a month in net terms.
When Should You Get It?
The best time to take out Income Protection is when you are young and healthy. Premiums are based on your age and health at the time of application. Securing a policy in your 30s locks in a much lower premium than waiting until your 40s or 50s.
If you rely on your salary to pay your mortgage, feed your family, and fund your pension, Income Protection isn’t a luxury—it’s the foundation of your entire financial plan.