Income Protection
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Income Protection is a Policy taken out to replace up to 75% of earned income (less any social welfare payment) in the event of an individual being unable to work due to illness or injury.
A regular income is paid from the Insurance Company to replace the loss of earnings until the person is medically fit to return to work or the end date of the Policy is reached.
Policy Features differ depending on:
The Benefit Amount i.e. how much income is to be paid out
The Deferred Period i.e. how long the insured is unable to work for before the benefit kicks in. This can be 4 weeks, 13 weeks, 26 weeks or 52 weeks. Obviously, the longer the deferred period, the lower-cost the premium will be
Term of Policy i.e. at what age the policy will cease
Premiums paid are tax-deducible at the marginal rate of tax if taken out by an individual. If the Company pays the premiums, there is no Benefit In Kind (BIK) on the premiums paid.
In the event of a Claim, the Income Protection pay-out is taxable as normal income would be.
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