The Orca Financial Guide to understanding
Income Protection Cover
Why would I need Income Protection Cover?
Income Protection Cover provides you with a regular income if you cannot work due to medium-term or long-term illness or injury. It is designed to replace some of your earned income if, due to illness or injury, you cannot earn an income for yourself.
Who is it available to?
Income Protection is available to those in full-time employment or who are self-employed. It protects you if you are out of work for long periods of time due to illness or disability, but it does not cover you in the event of being made redundant.
To qualify for Income Protection Cover you must typically work at least 16 hours per week. Some occupations are not covered for Income Protection, and it may not be offered to you if you have a significant medical condition
How much of my income is protected?
To ensure that you have a financial incentive to return to work, Income Protection is usually limited to 75% of your pre-illness earnings, less the single person’s Social Welfare Disability Benefit. You cannot insure 100% of your earned income and high earning restrictions apply.
Does the policy pay out immediately?
The policy pays out if you are out of work for longer than a period referred to as the ‘deferred period’, which typically ranges from 8 to 52 weeks. The cover normally pays out this benefit after the deferred period while you continue to meet the conditions of the payment, until the earliest of the following:
- The date the insurer determines you are fit to return to work; in some cases the insurer may be willing to continue paying a partial benefit for a period if you return to work part time.
- The date you return to work.
- The benefit termination age of the cover, which is usually 60 or 65. This can be earlier in some cases but can be no later than your planned retirement date