By Dave Kavanagh

Nobody goes to work thinking that something may occur leaving them with no income for a period of time. Many people realised how vulnerable they were when the pandemic arrived, dropping some incomes from €600, €800 or €1,000+ per week down to €350 of PUP. Many don’t give much consideration to how they would cope if they suffered a loss of income for an extended period because they think “it’ll never happen to me”. Sadly, many find out the hard way following an injury or illness that keeps them out of work for months or even years. This is where having Income Protection in place, can be the difference between maintaining a level of income that keeps your lifestyle virtually unchanged, or dropping to a level that could force you to use up any savings and also get into financial difficulty. Missing or being late with a few mortgage payments will have an impact on your credit rating making it difficult or impossible to secure credit for a number of years.

So how does it work? Depending on your circumstances, you choose an appropriate level of cover. This is based on not exceeding 75% of your salary, less any state income entitlement. You also choose a “deferred period” which refers to how long you are off work before payments commence. If you are hospitalised during this period, some plans pay a daily benefit even during the deferred period.The premiums are based on factors like your age and occupation, as some occupations would leave you more at risk of not being able to work. There is also tax relief on premiums paid for income protection, which could mean up to 40% of your premium is refunded by way of adjusting your tax credits. Considering that almost every aspect of your day to day living is directly dependent on you having an income, it is so important to research this for yourself. If dropping from your current income to the current state benefit is something that would impact badly on you, perhaps it is time to consider.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM , LMFM and TV3.