We are always making plans – plans for the weekend, for our next family holiday, our children’s education, our retirement. For most young people their ability to earn is their biggest asset. Over time, and with proper planning, this is replaced by personal and pension assets. But what happens if your ability to earn is cut short early in your career due to illness or injury?
Income protection provides a replacement income if you cannot work due to illness or injury after a certain period of time. You can take out income protection if you are in full-time work or are self-employed and receive tax relief on the premium at your highest rate of tax.
You may need income protection if you:
Your Harvest Adviser will help you decide how much cover you need. That cover should reflect your income. The benefit you receive must be set at a level which makes you no better off financially. This is so that you have an incentive to return to work.
In general, the most cover you can have at any one time (including that provided under other income protection plans and continuing income from your job or pension) is:
Costs will mainly depend on the:
After that, the main factors are your age, health, family medical history, job and lifestyle. As your age also affects your premium, we advice you don’t cancel your policy to take out a new one unless you have a good reason. As you get older, income protection will cost more and a new policy may have more exclusions, particularly if your job or state of health have changed.
You can get tax relief on your premiums at your marginal (highest) rate of tax, up to a yearly limit of 10% of your total income. This can make premiums more affordable, your benefit will be taxable if you make a claim.
If you are a member of a group scheme, your employer usually takes your premiums from your salary before tax.
If you have an individual policy, your insurance company will give you a statement showing the premiums paid. To claim your tax relief, you include this information with your tax return.
For more information, or to arrange a meeting to discuss your income insurance requirements, please contact us on 01 2375500 or email us at firstname.lastname@example.org.
IMPORTANT POINTS ABOUT INCOME INSURANCE
If you stop making your regular payments, you will no longer be protected, and will not be refunded any money.
You can not cash in your plan – it is not a savings plan.
If is very important that you re-evaluate your plan benefits against your current earnings, as they my not continue to meet your current earnings, as they may not continue to meet your needs.
At the time of a claim, your earnings must be above the level that justifies the amount of cover you have chosen. If not, you will receive a reduced benefit. In this case, we will not refund any part of the payments you have made.
The particular tax treatment contained herein is based on Harvest Financial Services Limited’s understanding of current Revenue practice as at March 2019. Please note that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should take such independent tax advice as you deem appropriate.
This marketing information has provided for discussion purposes only. It is not advice and does not take into account the investment needs and objectives or financial position or risk attitude or liquidity needs or capital security needs of a particular person. It should not be relied upon to make investment decisions.