Income protection insurance pays you a regular income if illness, injury or disability stops you working, usually up to 75% of your earnings, the CCPC says. Payments start after a waiting time you choose, called the deferred period. Revenue gives tax relief on premiums for an approved policy, up to 10% of your total income, and the benefit you receive is taxed.
What it pays
You pick the amount when you buy. The CCPC says the most you can claim is typically 66% or 75% of what you earned before you became ill.
That figure is a ceiling, not a promise. When you claim, the insurer takes off any sick pay from your employer, single person's Illness Benefit if you qualify, and other income you get while out of work.
The CCPC's example: Joe earns €40,000 a year and claims after a 26-week deferred period. His policy pays up to 75% of his earnings, less other income.
| Step | € a month |
|---|---|
| 75% of €40,000 a year | €2,500 |
| Less sick pay from his employer | €750 |
| Less social welfare Illness Benefit | €750 |
| What the policy pays | €1,000 |
Self-employed, with no sick pay or Illness Benefit, Joe would get the full €2,500. Payments usually stop when you go back to work, reach the age the policy ends (55, 60 or 65), or the insurer's medical officer decides you are fit to work.
Check the definition of disability. The CCPC warns that some policies pay only if you cannot do any paid work at all, or only for permanent total disability. If you can keep working in a second job, you cannot claim on a policy for your main job, the CCPC says.
The deferred period
This is the time between stopping work and the first payment. You cannot claim during it. The CCPC lists 4, 13, 26 and 52 weeks as common choices, and says some policies have none.
A shorter deferred period costs more. You can match it to your sick pay: the CCPC's example is an employer scheme of three months on full pay and three months on half pay.
The CCPC page gives two ranges. One section lists four weeks as a common option, while its claims section says deferred periods "typically range from 13 to 52 weeks". Ask the insurer which periods it offers.
Tax relief on premiums, and tax on the benefit
Revenue calls these permanent health benefit schemes, or income continuance plans. These are its rules, checked on 9 November 2026:
- Approval. Relief is due only if Revenue has approved the scheme or policy.
- Limit. Relief is capped at 10% of your total income for the tax year.
- How you get it. Your employer deducts the premium from gross pay before working out PAYE, or Revenue adjusts your tax credits and rate band. Claim the second way in myAccount, under "Health" and "Income Continuance".
- PRSI and USC. Premiums get no relief from PRSI or USC.
- The benefit. You pay PAYE and USC on payments from an approved scheme. The scheme administrator makes the deductions.
- Self-employed. You can choose to have the benefit treated as trading income by telling Revenue on Form PH (5) within six months of taking out the policy.
The CCPC says the relief is at your highest rate of tax. On a group scheme through work, the premium usually comes out of your salary before tax, so there is no further relief to claim.
How it compares with Illness Benefit
Illness Benefit is the State's weekly payment if you cannot work due to illness. The maximum personal rate in 2026 is €254 a week, for average weekly earnings of €300 or more in the relevant tax year (Citizens Information and gov.ie). Lower earnings get €198.90, €163.70 or €114.
| Illness Benefit | Income protection | |
|---|---|---|
| Who pays | Department of Social Protection | An insurer |
| Amount | Up to €254 a week in 2026 | Typically up to 66% or 75% of earnings, less other income |
| When it starts | After 3 waiting days | After your deferred period |
| How long | Up to 2 years, or 1 year with fewer contributions | Until you return to work or the policy's end age |
| Self-employed | Not covered: only PRSI classes A, E, H and P count | Can buy cover |
| Tax | Taxable | PAYE and USC apply |
To qualify for Illness Benefit you need at least 104 weeks of PRSI paid since you started work, plus contributions in the relevant tax year. The payment lasts 2 years if you have 260 or more weeks paid, and 1 year if you have between 104 and 259.
Rates rise in 2027. Citizens Information says Budget 2027 adds €10 to the maximum rate from January 2027. Employees also get Statutory Sick Pay for 5 days a year, and no Illness Benefit is paid for those days.
What changes the price
The CCPC lists your job, the level of cover, the deferred period, the policy term, your age, your health and family history, and habits such as smoking or drinking.
Your job counts for a lot. Insurers sort jobs into classes, and class 1 pays the lowest premium. The CCPC's examples:
- Class 1: accountant, bank official, solicitor, barrister.
- Class 2: bookmaker, hairdresser, dentist, laboratory technician.
- Class 3: social worker, locksmith, driving instructor, non-industrial electrician.
- Class 4: floor layer, garage mechanic, plumber.
Some insurers have a class 5 or D that is usually refused, the CCPC says, with Gardaí, farm workers and prison officers as examples. Joining a group scheme at work is usually cheaper.
There are narrower products. Bill cover pays up to 40% of income, with a limit of €2,000 for one person or €4,000 with a partner. Wage protector, aimed at classes 3 and 4, pays for up to 24 months, or longer if medical tests show you are severely disabled and you pass a functional assessment.
What the insurer must explain
Before you fill in a proposal form, the Central Bank's Consumer Protection Code (Regulation 333) says the insurer or broker must explain:
- what "disability" means in the policy;
- the benefits;
- the exclusions;
- any cut in the benefit if you get a disability payment from another source.
Pay premiums on time, or the policy can lapse. If you change your mind, you can cancel within 30 days for a refund, less any fees, the CCPC says.
Who may not need it
The CCPC says income protection is most relevant if you are self-employed, have little or no sick pay, have no ill-health pension, have dependants who rely on your income, or have no other income. If none of those apply, you may need less cover, or none:
- Good sick pay and an ill-health pension at work. An employer pension scheme may let you retire early with a pension if you can no longer do your job.
- Cover already through work. Check whether your employer has a group income protection scheme before buying a second policy.
- Other income or savings that would cover your costs for the deferred period and beyond.
After Illness Benefit ends, a person who is likely to be permanently unable to work may get Invalidity Pension if they meet the PRSI conditions, Citizens Information says.
Income protection is not the same as serious illness cover, which pays one lump sum for a listed illness. Our guide to serious illness cover explains the difference. Mortgage protection does not pay your repayments while you are sick either: see mortgage protection insurance. For an overview, read our life insurance guide.
Sources
- CCPC: Income protection insurance (accessed 9 November 2026)
- Revenue: Permanent Health Benefit contributions, published 23 March 2026 (accessed 9 November 2026)
- Revenue: Tax and Duty Manual Part 15-01-10, Permanent Health Benefit Schemes (accessed 9 November 2026)
- Citizens Information: Illness Benefit, page edited 7 October 2026 (accessed 9 November 2026)
- gov.ie: Illness Benefit (accessed 9 November 2026)
- Central Bank of Ireland: Consumer Protection Code, Part 4 Insurance (Regulation 333) (accessed 9 November 2026)
General information, not financial advice. Prices and rules change: check the details with the insurer before you buy.