Income Protection Policies (PHI)

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PROTECTION: Income Protection (PHI) Income Protection or (Permanent Health Insurance as it is sometimes referred to) provides you with an income if you are unable to work because of sickness or disability. Income Protection Insurance policies cover all types of sickness and disability – the important factor is that you are unable to work and part of your income is replaced until you are fit to return to work. Typically, the maximum benefit is 75% of your salary less any social welfare payments that you may receive. This type of plan will protect your income against: • illness • injury • disability • or accident resulting in you being unable to work for longer than your deferred period. Deferred Periods An Income Protection plan will provide you with an alternate source of income. This income would pay either a weekly or monthly benefit payable after a deferred period this typically would be a 13, 26 or 52 weeks. The deferred period is the length of time between when you were last at work due to the illness and when you start receiving an income benefit. Facts 1 in 6 of Irelands working population will be disabled for more than 6 months The average claim duration is 5.5 years Social Welfare disability allowance is just € 9,662 per annum for an individual For a family with 1 adult dependant and 2 children this is just € 18,360 per annum There is no Social Welfare benefit for the self-employed Only 15% of private sector workers are entitled to sick pay for more than 6 months Public sector workers receive full pay for their first 6 months of absence followed by half pay for the next 6 months 36% of those surveyed think their salary is protected by other insurance e.g Mortgage Protection, Loan Repayment Protection and Critical Illness cover* However, less than 10% of the Irish Workforce have any form of private salary protection based on Lansdowne Market Research Survey, April 2006 Can I get tax relief on premiums?* You can get tax relief on your premiums up to a yearly limit of 10% of your total income. If you are a member of a group scheme, your employer usually deducts your premiums from your salary before income tax and PRSI are deducted. You don't need to send any extra details with your tax return. if you have an individual policy, your insurer will give you a statement showing the premiums you have paid. To claim your tax relief, you simply include this information in your normal tax return. Is my benefit liable to tax? Income protection benefit is treated as income, so you must pay tax on it. Your insurer must deduct PAYE before they pay you.