Clients come into me with lots of plans for what they want to do in the future; renovate an old house, go scuba diving in tropical waters, own a log cabin, even just maintain their current lifestyle. All these ambitions are based on their ability to earn an income.
Income protection is insurance against your salary. You pay an insurance company a premium and in return, they will pay you a percentage of your salary (up to 75%) if you are unable to work due to accident, illness or injury. They will continue to pay you until you return to work or reach retirement age.
Yes, it can be expensive if you are on a good salary. €50,000 in cover for a 40 year old will cost €190 a month. You do get tax relief on the premiums though, reducing the cost of cover to €114. Your company can pay the premium with no benefit in kind.
While €190 a month is expensive, have a think what the potential payout is. If the 40 year old went out on a claim and couldn’t work again, by the time the policy stopped at age 65, he would have received €1.82m from the insurance company.
The ability to earn an income is the biggest asset you have. Lose it and your lifestyle will change drastically.
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