Income Protection
When life is going well, it is easy to take your income for granted. Yet, your income is the foundation of your family’s lifestyle and is by far your biggest asset. Your capacity to earn an adequate income allows you to repay the mortgage on your home, run your car, as well as pay for your bills, living expenses, activities, holidays & social life.
Taking steps today, to protect you against loss of income due to accident and illness may prove to be one of the most important financial decisions you’ll ever make!
Why should I protect my income in the event of illness/accident?
A common assumption that many people have, is that their employer or the state will provide them with sufficient financial support if they couldn’t work due to illness or accident. However, unlike our parents’ generation, many employers these days provide minimal or no benefits if you cannot work due to illness (e.g. pay for up to 6 months) & the state disability benefit at approx. €200pw* only covers the bare essentials in such circumstances.
The bottom line is that you have to consider the possibility of no income coming in at some stage during your working life. And for the vast majority of people, a loss of one’s income can lead to big financial trouble, that would lead to a major deterioration in an individual’s/family’s standard of living.
With this in mind, it is worth considering the following:
- How much does your own & your family’s current lifestyle cost you (salary, less monthly savings = lifestyle costs)
- What % of your salary will your employer provide you with if you are out of work due to illness/accident and for how long would this benefit continue to be paid?
- Are you entitled to the state disability benefit?
- Are you self employed? If so, how would your business profits be impacted if you were unable to work due to illness or accident?
- How long would your savings last if you had to support yourself and your family’s lifestyle for a prolonged period? What expenses could you cut back on and what are the essential items that you would not want to cut back on?
Summary
We do not think twice about insuring things like our homes & cars, as we would experience significant financial hardship if these assets were to be damaged / destroyed. However, your income is by far your biggest asset & the loss of one’s income for a prolonged period (due to illness/accident) could result in even greater financial hardship.
*Invalidity Pensions (For PAYEemployee with average earnings of EUR 150 + per week in the relevant tax year.) Source:Department of Social and Family Affairs, june 2010.
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Allied Irish Banks, p.l.c. is a tied agent of Irish Life Assurance plc, for life and pensions business.