What Is Income Protection Insurance in Ireland

What Is Income Protection Insurance?

Think about this for a second.

If you had a money-making machine in your house, would you insure it?

Of course you would — because you, dear reader, are that money-making machine.

Over your lifetime, you’ll generate hundreds of thousands, if not millions, of euro. If that machine breaks down — injury, illness, burnout — the money stops. That’s what income protection is for: keeping your pay-cheque alive when you can’t work.

Some people like to read, some prefer videos.

You do you, Boo.

If you like videos – here’s our Income Protection Explainer Video.

If you prefer to read, let’s crack on!

How Income Protection Works

We all insure the car, the house, maybe even the dog — but not the thing that pays for all of them: your income.

Income protection steps in when illness or injury stops you earning. Learn more about how policies differ here.

It pays a monthly income after a short wait (you choose how long) and keeps going until you’re back, retired or hit the policy finish age.

No drama, just money in your account when you need it most.

Without it, your big safety net is the State Illness Benefit — €244 a week for at most two years… if you qualify.

If you’re self-employed?

Nothing. Zilch. Sweet FA.

For the self-employed, the only potential fallback is the State’s Invalidity Pension — but you’ll need to prove you’re permanently incapable of work for at least 12 months, and likely for another 12. You might have to show years of medical records and tax history to qualify. In other words, it’s no safety net at all. Income protection is your real-world backup plan.

The Financial Reality Check

Aviva’s numbers from 2024 show the average claim lasted 7 years 4 months. One person’s been on claim for 33 years.

That’s not bad luck — that’s life happening. Compare providers in Ireland.

Who Actually Needs It?

If losing your pay-cheque would cause financial hardship, you need it.

And yes, that pretty much covers every person working in Ireland unless you have access to a trust fund, yaw.

Most private-sector jobs stop paying after a few weeks’ sick leave.

Public sector? It used to be six months full pay + six half. Now it’s three + three.

And if you’re self-employed like me, you’re on your own.

So, unless your mortgage, groceries and kids all agree to take a break while you’re off, income protection is essential.

How Much Does It Pay and What Does It Cost?

You can protect up to 75 % of your gross income (minus any State benefits).

And here’s the good bit — you get tax relief at 20 % or 40 % on your premiums, so it costs a lot less than people think. See how tax relief works.

Take a 35-year-old on €60 000. They insure 75 % = €45 000 less state illness benefit of €12 688 = €21 062.

Premium ≈ €100 a month gross → €60 after tax relief.

If they’re off work for a year, that’s €21 062 extra income alongside €12 688 from the State.

That’s not pocket change — that’s the difference between “coping” and “crisis”.

Reviewable vs Guaranteed Income Protection (What People Miss)

When people compare income protection quotes, they often notice big price differences for what looks like the same cover.

One of the main reasons is whether the policy is reviewable or guaranteed.

Guaranteed Income Protection

With a guaranteed policy, the premium is fixed at the start.

It won’t change because you get older, claims increase, or the insurer changes its pricing strategy. As long as you keep paying, the price stays the same.

It costs more at the outset, but you know exactly where you stand long term.

Reviewable Income Protection

Reviewable policies start cheaper.

The insurer reviews the premium at set intervals, usually every five years. At review, they can increase the cost, keep it the same, or reduce it.

In practice, reductions are rare.

The review is not based on your health or personal claims history. It’s based on the insurer’s overall claims experience across similar policies.

That means your premium can rise even if nothing about you has changed.

So why do insurers offer reviewable policies?

Because they transfer some long-term pricing risk back to the customer.

If claims across that block of business rise, premiums rise too.

For some people, especially those closer to retirement or working to a tight budget, reviewable cover can still make sense. For others, the uncertainty defeats the point of the cover.

The important bit

It’s easy to get a policy.

It’s much harder to get the right one.

Reviewable versus guaranteed is one of those decisions that only really shows its importance years down the line, when changing or replacing cover may no longer be straightforward.

Four Excuses People Give (and Why They’re Garbage)

“I’m young and healthy.”

Good for you. So were most claimants. There’s a 30 % chance you’ll be out of work for 90 days or more during your career. You don’t have to be unlucky — just human.

“Social welfare will cover me.”

€244 a week for two years. That’s day-to-day expenses money, not mortgage money.

If you’re self-employed, you get nothing.

“Work already covers me.”

Most don’t. Ask HR before you bet on it.

Does Income Protection Pay Claims?

Our preferred provider Aviva paid 92 % of all claims last year.

What It Actually Covers

If a doctor signs you off work, the insurer starts paying after your deferred period (4 – 52 weeks).

It covers every medically recognised illness and injury that stops you working.

It does not cover redundancy or deciding you fancy a sabbatical in Bali.

Think of it this way: if you were explaining income protection to a five-year-old, you’d say “Mum is sick and can’t go to work, so the people in suits are going to give her money to buy food and toys until she’s better.” That’s really all it is — your income keeps coming in, even when you can’t earn it yourself.

Life Insurance vs Serious Illness vs Income Protection

More detail: Income Protection vs Serious Illness Cover.

Already have ‘income protection’ through your bank?

Many people are told they have income protection through a bank policy. In most cases, this is Bill Pay.

Bill Pay can help short-term with specific bills, but it does not replace your income, usually stops after a fixed period, and does not qualify for tax relief.

If this sounds familiar, it’s worth checking what you actually have before assuming you’re covered.

Who Qualifies (and Who Doesn’t)

Most full-timers and the self-employed can get cover, but insurers still look at three things: your health, your job and your habits.

Chronic back pain or dodgy knees might mean an exclusion, and if your work involves climbing cranes for fun, expect to pay a bit more.

If you’re unsure, we’ll tell you straight. No nonsense, no hidden loadings. If you’re self-employed, read this.

How an Income Protection Claim Works in Real Life

1. Check your deferred period. This is the “waiting time” before payments start — often 8, 13, or 26 weeks. If your doctor expects you to be out longer than that, it’s time to let the insurer know.
2. Notify your insurer early. For example, Aviva asks you to contact them halfway through your waiting period — two weeks into a 4-week period, four weeks into an 8-week period, and so on.
3. Complete the forms. You’ll receive a claim form (you fill this in) and a medical certificate (your GP completes this).
4. Provide financial details. Employees usually send three recent payslips and a P60. Company directors and the self-employed provide their last three years’ accounts and tax assessments.
5. Assessment and approval. The insurer reviews your case individually. Once approved, monthly payments go straight into your bank account.
6. Ongoing reviews. You’ll have regular medical or financial check-ins to make sure everything’s still accurate. If you recover and later relapse, you can claim again under the same policy.

If you’re hospitalised over seven days, many insurers start paying early.

In short: you handle the forms, wait out your period, and the insurer keeps your pay-cheque flowing.

Information cross-checked with Aviva Life & Pensions Ireland (2025 claims guidelines).

Employer vs Personal Cover

Some lucky ducks get group cover through work — usually big companies or the public sector.

But leave that job and poof — it’s gone.

A personal policy follows you wherever you go.

You own it, you claim the tax relief, and you don’t lose it just because you switched bosses. If you’re self-employed, here’s what to know.

Typical Cost Examples (2025)

A 30-year-old teacher on €45 000 pays around €40 net a month (after tax relief).

A 40-year-old engineer on €60 000 pays about €65.

A GP on €100 000 pays roughly €100.

It’s small money for big peace of mind.

Can You Increase Your Income Protection Over Time?

Absolutely.

Your policy doesn’t have to stay frozen at the same amount forever. If your salary rises, you can increase your cover too — and there are three simple ways to do it.

1️⃣ Indexation (Inflation Protection)

Indexation doesn’t increase your initial premium, but it’s an optional benefit — you must include it when setting up your policy.

Each year, your premium increases by 3.5% and your cover increases by 4.5 %. It quietly keeps your benefit in line with inflation so your payout maintains its buying power.

Once it’s added, it runs automatically.

2️⃣ Claim Escalation

This option will increase your initial premium, but you’ll be glad you have it if you claim is lonmg term (remember the average duration of a claim at Aviva is 7.5 years)

Claim escalation doesn’t increase your amount of cover while you’re healthy, but once you’re out on claim, your payout will increase by 3% each year you’re out of work.

It’s designed to stop inflation from eating into your income during recovery — a small extra cost that can make a big difference over time.

3️⃣ Guaranteed Insurability Option (My Favourite)

This is an automatic free benefit built into most policies. It lets you increase your cover by up to 20% every three years without any new medical questions — so it’s a brilliant way to future-proof your cover.

You can use this option up to five times during your policy, effectively doubling your original cover as your earnings grow. When you exercise it, your premium will rise based on how much extra cover you add, the premium rates at that time, and your age when you increase it — but never your health.

That’s the beauty of the GIO: even if your health changes down the line, you can still boost your protection without a single medical question.

Why Job Type Affects the Cost

Insurers sort every occupation into one of four occupation classes. The higher the chance of a claim, the higher the class and the premium.

If your role lands in Class 3 or 4, the premium will be higher — or you might look at a Wage Protector plan instead.

Real Stories from Claims and Rehab

• ✅ A factory worker injured in a car crash retrained as an accountant through Aviva’s Talent Fusion programme after six years on claim.
• ✅ A forklift driver with a bad back became a chef with career-change support from Aviva.
• ✅ Royal London’s Helping Hand service provided counselling and physio to over 3 000 Irish claimants in 2024.

Is Income Protection Worth it?

Watch two short claimant stories from Aviva and you’ll agree that it’s the most important thing you can buy:

Marc’s story → |
Vanessa’s story

Editor’s note: First published 2020 | Refreshed February 2026 to clarify the difference between income protection and bank-sold Bill Pay.