Have you ever wondered what would happen if you couldn’t work for months—or even years—due to illness or injury? For most Irish families, the thought of losing their primary income stream is nothing short of terrifying. This is where income protection insurance enters the conversation, offering a financial safety net that many of us might need but haven’t properly considered.
Income protection insurance provides regular payments that replace part of your lost income when you’re unable to work due to illness or injury. Unlike other insurance types that might be more familiar to you, income protection is specifically designed to keep your household finances afloat when your ability to earn is compromised.
The Irish Context: Social Welfare vs. Reality
In Ireland, we do have the Illness Benefit system, but it’s worth asking whether it would truly be enough to maintain your current lifestyle. As of 2025, the standard weekly rate for Illness Benefit is quite modest, and likely represents just a fraction of your current earnings.
Consider these sobering facts about illness and work in Ireland:
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1 in 4 Irish workers will experience a period of disability that prevents them from working before they reach retirement age
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The average duration of long-term illness claims is over 7 years
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Most Irish households have less than three months of savings to cover their expenses
With mortgage payments, utility bills, childcare costs, and everyday expenses continuing regardless of your health status, the gap between state benefits and your actual financial needs could be substantial.
Who Should Consider Income Protection?
Not everyone needs income protection insurance, but many Irish workers would benefit from it. You might be a strong candidate if:
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You’re self-employed or work as a contractor (no employer sick pay to fall back on)
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You’re the primary earner in your household
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You have significant financial commitments like a mortgage or childcare costs
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You have inadequate savings to cover extended periods without income
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Your employer offers limited or no sick pay beyond the statutory minimum
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You work in a profession with higher risks of injury or burnout
On the flip side, you might be able to skip income protection if:
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You could easily reduce your expenses to match Illness Benefit payments
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You’re financially independent or close to retirement
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You have a partner whose income could comfortably support your household
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Your employer offers exceptional sick pay benefits
Understanding What You’re Buying
Before deciding, it’s crucial to understand what income protection policies in Ireland typically cover:
Key Features and Options
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Benefit amount: Most Irish policies pay between 50-75% of your pre-tax income
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Deferred period: The waiting time before payments begin (typically 4, 8, 13, 26 or 52 weeks)
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Benefit period: How long payments continue (until recovery, retirement age, or a fixed period)
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Definition of incapacity: “Own occupation” cover (can’t do your specific job) vs. “any occupation” cover (can’t work at all)
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Indexation: Option to increase cover annually to combat inflation
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Guaranteed insurability: Ability to increase cover without medical questions when life circumstances change
Common Exclusions
Most Irish income protection policies won’t cover you for:
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Pre-existing medical conditions (unless disclosed and accepted)
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Self-inflicted injuries
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Illness or injury resulting from drug or alcohol misuse
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Pregnancy (though complications may be covered)
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Claims while living abroad (beyond a specified period)
Tax Benefits You Shouldn’t Ignore
A significant advantage for Irish taxpayers is that income protection premiums qualify for tax relief at your marginal rate. This means a higher-rate taxpayer effectively gets 40% of their premiums back through tax relief, substantially reducing the net cost of coverage.
Making Your Decision
Ultimately, deciding whether you need income protection comes down to your personal risk tolerance and financial circumstances. Ask yourself:
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Could I and my family maintain our standard of living if I couldn’t work for six months? A year? Five years?
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Would the stress of financial pressure make recovery from illness or injury more difficult?
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Would I be comfortable relying on family members, savings, or state benefits if I couldn’t work?
If these questions raise concerns, speaking with a qualified financial advisor who understands the Irish market could be your next step. They can help you compare policies, understand the fine print, and find coverage that fits your specific situation.
Income protection isn’t for everyone, but for many Irish workers, it provides not just financial security but also peace of mind—knowing that if the worst happens, at least it won’t be compounded by financial catastrophe.