Income protection
If your income stopped tomorrow, what would you live on?
Most people insure their car and their phone, but not the thing that pays for everything — their salary. If illness or injury kept you off work, the State pays a maximum of €254 a week. Here is the gap, and how income protection fills it.
The gap, on your salary
a month, after tax
€254/week max, from January 2026
If illness kept you off work and you relied on the State alone, you'd lose about
€1,983.52 a month
That's 64% of your take-home gone. Statutory sick pay covers just 5 days a year at 70%, capped at €110 a day.
Illness Benefit max €254/week (Jan 2026). Statutory Sick Pay: 5 days at 70%, €110/day cap. Some employers top this up — check your contract.
What you can actually count on from the State
Many people assume the State would carry them through a long illness. The reality is thinner than expected:
- Statutory Sick Pay: five days a year, paid at 70% of your wage and capped at €110 a day. You need 13 weeks' service to qualify.
- Illness Benefit: after sick pay runs out, a maximum of €254 a week — and only if you have enough PRSI contributions. It is taxable, and €254 is the ceiling: the actual rate is banded on your earnings two years back, so many people get less.
- Your employer: some top up sick pay for a period; many do not go beyond the statutory minimum. Check your contract.
For someone on a typical salary, that combination replaces well under half of normal take-home pay — and, crucially, it does not last.
The part most people miss: it runs out
Illness Benefit is not paid indefinitely. It stops after 624 days — about two years — and only if you have 260 or more PRSI contributions. With 104–259 contributions it stops after just 312 days, roughly one year. After that, there is no automatic payment: you fall back on means-tested Disability Allowance (or Invalidity Pension if you qualify), where savings and a partner's income can reduce or remove what you get.
That is the real gap. A serious illness can keep you out of work for years, but the State's earnings-replacement runs for one or two of them and then becomes a means test. An income-protection policy is built for exactly this: it keeps paying a monthly income until you recover or reach the policy's end age — typically 65 or 68, not 65 weeks.
How income protection works
You choose the share of salary to cover (usually up to 75%, less the State benefit) and a waiting period — the time off work before payments begin, often 4, 13 or 26 weeks. If you are still unable to work after that, the policy pays a monthly income until you recover or reach the policy's end age. A longer waiting period means a lower premium.
The tax angle
Premiums on an approved policy get income-tax relief at your marginal rate, up to 10% of your income. At the 40% rate that cuts the real cost of a €100 monthly premium to about €60. When a claim is paid, the income is taxed through PAYE like a salary — so the figure you insure should be thought of as a gross amount.
Work out your current take-home first on the salary calculator, so you know the figure you would actually need to replace.