So, what if the most dreaded ‘What if’ happened to you? That you were simply unable to provide for yourself and your family simply because you are too sick or incapable of being able to work? It’s time to think of your income as an asset. We’re in the habit of insuring most of our assets – house, car, jewellery. Even our phones! Yet we neglect what amounts to our greatest asset, our income.

We don’t usually think of our current income and our future earnings as an asset. However, if you take a moment to think about it, the money you earn pays for almost everything you have… mortgage, car loan, bills, children’s education, insurance and so on. Without it, you are faced with a pretty worrying picture. Nobody wants to think about what life would be like should disability or illness strike.

This issue is even more stark for Independent Professional Contractors. It’s a zero sum game that you are either at work and being paid or unable to work and relying on savings to make up the shortfall. But what happens when the savings run out? What if it is a long-term illness/disability?

It’s probably why 41% of Independent Contractors recently polled by Aviva confirmed that they already had such a plan in place.

Imagine a scenario where you are leaving the Dr’s office after having been given an awful diagnosis. Your 1st thought will obviously be for your health. But very quickly survival mode kicks in and you will begin to imagine the financial consequences and how you will manage to attempt to get better with no income coming in.

This is where an Income Protection plan is so important and is appropriate to anyone earning a salary, whether self-employed or employed, PAYE or sole trader, regardless of their age or stage of life.

With Income Protection you pay a monthly premium that is based on your occupation and the state of your health. It’s also that important that note that the Government are prepared to help you with the cost as all premiums are Tax deductible which means you effectively means only have to pay 60% of the cost of the premium which is a huge bonus.

This ensures that in the event of an accident or illness, which leaves you unable to work, the policy will pay you a regular income. As there are no restrictions on the type of injury, illness or disability that an income protection plan policy covers, you get complete peace of mind. Best of all, you get to choose and tailor an income protection plan that suits your individual circumstances, with a range of cover types. What’s more, as your needs and circumstances change, you can adapt your income protection policy to suit changes in your life.

In general, we tend to be overly optimistic about how we would manage if we were unable to work due to illness or injury. We over-estimate the support provided by the State and underestimate our expenses and likelihood of having to claim.

It’s important to note that if you are an Umbrella Director or Director of your own Ltd company, you will not qualify for the State Illness benefit but may be eligible for the Invalidity Pension of €10,843 per year.

That’s €49.28 per day. How does this compare to your current daily rate?!

The reality for most people is that their level of “outgoings” either matches or exceeds their income. So, for a person who no longer is earning that income there will be a significantly negative impact on their lifestyle not to mention the added cost of coping with a medical condition.

Its why Income Protection is often described as the most important deduction on your payslip.

Speak to us today about Income Protection – it should form a core part of any financial plan.


Robert Whelan

Rockwell Financial Management

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