Income protection
Replaces part of your income if illness or injury stops you working, paid regularly until you recover or retire, so a health setback does not become a financial one.
What it is
Income protection pays you a regular income if you cannot work because of illness or injury. Unlike a lump sum, it keeps paying month after month for as long as you are unable to work, up to the end of the policy term or your chosen retirement age. It is the protection most people overlook and arguably need most, because your income is what everything else in your finances rests on.
Who it is for
- Self-employed people and contractors with no employer sick pay
- Employees whose sick pay runs out after a few weeks or months
- Professionals and anyone whose lifestyle depends on their income
- Business owners, who can set it up as executive income protection through the company
How it works
You choose the level of cover, the age it runs to, and a deferred period: the wait between falling ill and payments starting. A longer deferred period lowers the premium. Cover is usually capped at around 75% of your earnings, less any State illness benefit, and your occupation affects both the premium and the terms. If a covered illness or injury stops you working, income begins after the deferred period and continues until you return to work, recover, or reach the end of the policy.
| Deferred period | Typically suits |
|---|---|
| 4 weeks | Little or no employer sick pay; you want cover to start soon |
| 8 to 13 weeks | Some sick pay or savings to bridge the first months |
| 26 to 52 weeks | Longer sick pay or reserves; keeps the premium lower |
The standout feature: tax relief
Income protection is the one personal protection policy that qualifies for income tax relief on the premiums, at your marginal rate. For a higher-rate taxpayer that is 40% relief, so €100 of cover costs €60. Relief is available on premiums up to 10% of your total income. When the benefit is paid it is taxed as income, and the insurer usually deducts the tax before you receive it. The self-employed qualify for relief too, and where a company pays for executive income protection the premium is generally a deductible business expense.
What can I cover, and what does it cost after relief?
Income protection is the one personal policy that attracts income tax relief, so the headline premium overstates what it costs you. Enter your earnings to see the most you can cover, and add a quoted premium to see what it costs after relief at your rate. The State illness benefit is deducted from what an insurer pays, so treat the cover figure as a ceiling. The deferred period and your occupation class matter as much as the price, and that is the part worth a conversation.
Income protection calculator
The most you can cover, and what the premium costs you after tax relief.
Fill in the fields above and press Calculate.
Why talk to BDS
Occupation class, deferred period and policy definitions all decide whether a claim pays, and they vary between insurers. We match the cover to how you actually work, make sure the tax relief is claimed, and compare the whole market rather than one provider. Bryan, Barbara and David advise on both personal and executive cover.
Common questions
Usually up to around 75% of your earnings, less any State illness benefit. We calculate the figure for your situation.
Yes. Income protection premiums qualify for relief at your marginal rate, on up to 10% of your income. It is the only personal protection cover that does.
The wait before payments start. A longer wait means a cheaper premium, so we match it to your sick pay and savings.
Yes, the benefit is taxed as income, and the insurer normally deducts the tax before paying you.
Other kinds of cover
Important information
Tax reliefs, thresholds and rules referred to here are set by Revenue and apply to the 2026 tax year. They can change in future Budgets and Finance Acts, and the right cover depends on your own circumstances. The examples are illustrations, not quotes.
David Sheahan Insurance & Investments Ltd t/a BDS Financial is regulated by the Central Bank of Ireland. Reg. no. 115813. Offices in Limerick, Dublin and Galway.
This content is general information and is not financial advice.
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