Every three minutes someone in Ireland receives a diagnosis of cancer, according to the National Cancer Registry of Ireland, becoming one of the 40,000 new cases of cancer diagnosed each year, writes
It’s a sobering thought, how frequently someone hears the news and finds their lives dramatically altered.
And that is just one disease, others find themselves facing a whole new set of circumstances as a result of cardiac conditions, stroke or an accident.
The possibility of being off work for a prolonged period is not something any of us like to contemplate, outside of pleasant daydreams about a Lotto win.
But serious illness or accident can affect anyone, which is why financial adviser Carol Brick, Managing Director of Her Money, is drawing attention to the importance of protecting your income.
“Having a good overall protection plan in place if you are unable to work brings great peace of mind,” Ms Brick says. “Unfortunately, the bills don’t stop when you do. In fact, very often the bills increase when you are sick or injured.
According to a study by the Irish Cancer Society, the costs around receiving treatment when you include travel, prescriptions, specialist medical care and equipment can vary from €862 to as high as €1,200 per month.
"Many people mistakenly believe that having a medical card or private health insurance will cover them for these extra expenses.
“That’s why having a protection plan in place, such as income protection or serious illness cover is so important.”
HerMoney conducted a recent survey which found just 27% of women and 22% of men have income protection cover. Reasons not to have it included worry about the cost and a lack of understanding of the benefits.
But insuring your earnings against sudden shocks, be it through Income Protection or Specified Illness Cover, is something anyone with an income and more importantly regular outgoings should consider.
You could need it sooner than you imagine.
Aviva’s analysis of its most recent protection claim statistics found over half (53%) of claimants were under the age of 50 at the time of claiming income protection.
“We have had so many clients come to us after they’ve had a health scare and unfortunately for them, it’s too late to take out this type of cover,” Ms. Brick says.
“This is something everyone needs to think about whether you’re self-employed or an employee.”
Many people are unclear as to what financial support is available to them and Ms Brick advises people find out.
“If you’re an employee and paying PRSI you are entitled to State illness benefit of €203 per week,” Ms Brick says.
But if you are self-employed, you’re not entitled to this State benefit. It’s a great comfort to know if illness knocks on your door, you’ll have 75% of your income payable.
"Check with your employer first and see how long would they pay you if you are sick and unable to work.
"Some employers will pay up to a year; for others, you may need the policy to kick in after four weeks and this will make the premium more expensive.”
Income protection insurance pays out if you cannot work due to illness or injury. Income protection will provide you with a monthly income of up to 75% of your salary until you are healthy enough to return to work.
You can get tax relief on your premiums at your marginal rate of tax (as long as the premiums do not exceed 10% of your total income).
This can help make this premium more affordable, but remember your benefit will be taxable if you make a claim.
Specified illness cover is different to income protection in that you are paid a tax-free lump sum if you are diagnosed with one of the covered serious or chronic illnesses.
Again, this cover is medically underwritten. Unlike income protection, there is no tax relief on specified illness cover. However, the lump sum paid out is tax free.
“You can also increase the level of cover, if for example your circumstances change in the future, you have more children etc,” Ms Brick says.