3 Reasons Not To Buy Income Protection

Introduction: Income Protection Demystified

Many still find themselves puzzled by the concept of Income Protection.

It’s a bit like the famous “tracker mortgage” conundrum of yesteryears – older readers may remember this ad.

Oh the LOLs we had back in the late noughties…until the crash when we realised the banks themselves didn’t really understand what a tracker mortgage was either 

Anyway, back to the income protection question – what does it actually do?

Unpacking Income Protection: A Safety Net for Your Salary

Income protection is an insurance policy for your hard-earned moolah.

Imagine this scenario: you suffer an illness or injury that keeps you away from work.

What’s the role of income protection in this scenario?

It’s simple – it gives you money until you’re back on your feet and ready to return to your job.

The Financial Reality Check

Now, let’s consider another hypothetical scenario:

What if your income stream suddenly dries up tomorrow because you’re injured in a car accident?

How long before the bills start to pile up and you struggle financially – as well as mentally?

For most people, a mere month might be stretching it.

However, here’s the eye-opener – the average duration of an income protection claim spans an astonishing 7 years.

Aviva are paying a claim for the past 31 years!

Imagine being unable to work and earn for that long.

Countering Common Misconceptions

By now, you might be nodding in agreement, seeing the benefits of income insurance but also wary of spending money on it because:

Reason 1: “I’m Invincible – I’m Young and Healthy, I Don’t Need It!”

Reality check time – statistics show that there’s a 30% chance you will face a disability that sidelines you from work for 90 days or more during your career.

You might be fortunate and swerve this stat, but what if you’re among the 30%?

Think about it – out of 10 people reading this, on average, three will find themselves out of work for more than 90 days.

Do you feel lucky?

Reason 2: “I’ll Get By with Social Welfare Benefits”

Consider this scenario: €220 per week.

Could you manage your financial commitments on that alone?

Here’s the kicker – that €220 is only guaranteed for two years (assuming you’ve paid your taxes).

What if your inability to work persists beyond two years?

Remember, the average claim duration stands at 7 years.

Oh, and if you’re self-employed, there’s no €220 to fall back on – you’ll get nothing if you can’t work.

If you’re self employed and don’t have income protection, you’re either brave or foolhardy.

Reason 3: “I Probably Have Coverage Through Work”

Optimism is great, but it won’t pay your mortgage.

The facts are that most private employers in Ireland don’t provide long-term income protection.

Even if you’re a public or civil servant, the sick pay benefits aren’t as generous as they used to be – it’s shifted from full pay for six months and half pay for six months down to full pay for three months and half pay for three months.

In other words, you’re on your own after just six months.

The Crux of the Matter: Income Protection Is for Everyone

In a nutshell, if you earn an income, you need income protection so stop messing about, do yourself a huge favour and insure it!

Don’t gamble with your income—get income protection for peace of mind.

Taking Action: Your Next Steps

Here’s a roadmap to follow:

1. Find out Your Sick Pay Entitlements: Reach out to your HR department to determine your sick pay benefits – find out how much you’d receive and for how long.
2. Check for Existing Income Protection  Through Work: If you already have income protection, excellent! If not, skip straight to step 3.
3. Secure an Income Protection Policy: Move swiftly to put an income protection policy in place. It’s about preserving your independence and dignity, so you don’t have to rely on others or state assistance. You’ve worked tirelessly to get where you are today, don’t let an unexpected illness ruin everything.
4. Explore Tax Benefits: Here’s a bonus – you can enjoy tax relief of up to 40% on your premium payments, making it much more affordable than you might have thought.

Conclusion

If you don’t have it through work, get it.

It’s that simple.

Don’t leave your financial security (or even worse the security of your fmaily) to chance.

Take proactive steps: to safeguard your income and your peace of mind.

Sleep soundly.

If you’d like personalised advice based on your current circumstances, please complete this questionnaire, and I’ll get back to you asap.

Thanks for reading

Nick

lion.ie | Protection Broker of the Year 🏆