Income Protection Insurance in Ireland: Cover, Cost and Tax Relief

Income protection insurance is one of the most overlooked types of cover for people building a life in Ireland, yet it protects arguably your most valuable financial asset, your ability to earn an income. Here's how it works, what it costs, and how the tax relief makes it noticeably cheaper than it first appears.

What does income protection insurance actually cover?

Income protection (sometimes called permanent health insurance or PHI) pays you a regular income, typically up to 75% of your gross salary (minus any state illness benefit you're entitled to), if you're unable to work due to illness or injury for an extended period. Unlike a lump-sum critical illness policy, it pays out repeatedly, as a replacement income, for as long as you remain unable to work, up to your policy's chosen retirement or end age. This makes it especially valuable for self-employed people in Ireland, who don't have the same sick pay protections as employees, and for anyone whose employer offers limited or no sick pay beyond a short period.

How do waiting periods (deferred periods) work?

The waiting period, also called the deferred period, is how long you must be unable to work before payments start, and you choose it when setting up the policy. Common options in Ireland are 13, 26, or 52 weeks. A shorter waiting period (13 weeks) means faster payouts if you're unable to work, but a noticeably higher monthly premium. A longer waiting period (52 weeks) is cheaper because the insurer only pays out for genuinely long-term absences, and makes sense if your employer already provides strong sick pay cover for the first several months of illness. Matching your waiting period to your employer's actual sick pay policy, rather than defaulting to the shortest option, is one of the easiest ways to control cost.

Is there tax relief on income protection premiums?

Yes, and this is a significant advantage over most other insurance types. Income protection premiums in Ireland qualify for tax relief at your marginal income tax rate (20% or 40%), subject to a limit of 10% of your total income for the year. In practice, this means a higher-rate taxpayer effectively gets 40% of their premium back through reduced tax, making the real cost significantly lower than the headline monthly premium. This tax relief is usually claimed either automatically if paid through payroll (a "net pay" arrangement) or via your annual tax return through Revenue's myAccount or ROS if paying independently.

How much does income protection cost in Ireland?

Cost depends on your age, occupation, health, chosen waiting period, and benefit level. As a general guide for 2025, a healthy office-based professional in their 30s might pay somewhere in the region of €50 to €100 per month for a policy covering 75% of a typical professional salary with a 13 or 26-week waiting period, before tax relief is applied. Higher-risk occupations (manual trades, for example) generally pay more, and premiums can rise toward €150 per month or beyond depending on the specifics. After tax relief at the higher 40% rate, the effective net cost can be considerably lower than the quoted premium.

Who should prioritise income protection in Ireland?

Self-employed people and contractors are the clearest case, since they typically have no employer sick pay safety net at all and only limited state supports. Employees with weak or short employer sick pay schemes, common in smaller companies, also benefit significantly. Higher earners generally have more to lose in absolute terms if unable to work, and mortgage holders with significant monthly repayments should weigh income protection alongside mortgage protection life insurance, since income protection covers you while alive but unable to work, a gap mortgage protection life insurance does not address.

Frequently Asked Questions