Income protection insurance is a type of personal insurance that can help you cover the financial repercussions of being unable to work due to illness or injury. Income protection policies will pay you a monthly income for a specified period of time if you’re unable to work, and they can be taken out by individuals and families alike. If you’re self-employed or employed and want to ensure that your family will be able to keep their head above water financially if something happens to you, then an income protection policy may be right for you. In this article we’ll discuss tax relief in Ireland for income protection policies and how it works.
Income Protection Policy Tax Relief
For income protection insurance policies, tax relief is available at the rate of 20%. This means that if you have a premium of €100 per month, your annual tax relief will be €2,000. The maximum amount of tax relief that can be claimed each year is €2,000.
This tax relief can also include any premiums paid for critical illness cover in one policy and not just for income protection cover.
The maximum amount of tax that may be imposed upon an employer’s contributions under an income protection policy is limited to 20% (€200) per annum on each employee covered by such a policy (regardless of whether the employer contributes or not).
What Income Protection Policy Is
If you’re looking to protect your income, an income protection policy is a type of insurance policy that can help you if you get injured or fall ill and are unable to work.
What does it cover?
Income protection policies typically cover:
- The cost of replacing your lost income due to injury or illness (e.g., if you are unable to work for a prolonged period)
- Travel expenses for medical treatment (e.g., if you need to go abroad for treatment), as well as accommodation costs while away from home
Income Protection Policy Cost
Income Protection policies are based on the level of cover you choose. The more cover you choose, the higher your monthly premium will be. There are various levels of cover available and it is important to understand what each one offers before making a decision.
You can choose whether you would like to have a policy that pays out a lump sum or monthly payments in the event that you suffer an illness or accident that prevents work for a period of time. If you opt for monthly payments, this will be taken from your salary by your employer and paid into an account with an insurance company until your claim falls due.
Takeaway:
In the event of an illness or injury that prevents you from working, income protection insurance can replace lost income. Income Protection policies are often sold in conjunction with other types of life insurance like critical illness cover or term life insurance.
Adding Income Protection to your financial plan is a great way to ensure that your family has enough money coming in no matter what happens to you—and it’s also tax-efficient! In fact, Revenue has gone so far as to say that “it is not possible for such benefits to be considered personal savings” when calculating your taxes.
Conclusion
All in all, income protection tax relief can be worthwhile, but you need to make sure that it’s the right choice for your needs. The most important thing is to make sure that you’re getting the best deal possible on your policy—and if you’re not sure where to start, we’re here to help! We have years of experience helping people find affordable insurance policies online with no sales pressure or hassle. If you’d like more information about how our team can assist with finding a suitable policy for your needs, please get in touch with us today!
