What is a Salary Protection Scheme?

A Salary Protection Scheme (also known as Income Protection Insurance or Permanent Health Insurance) provides a replacement income if you are unable to work due to illness or injury. This financial safety net ensures you can continue to meet your financial obligations while focusing on recovery. In Ireland, salary protection schemes are particularly important because statutory sick pay is limited to just 5 days per year for private sector workers. Without income protection, many workers face significant financial hardship during extended illness or injury.

Key Features at a Glance

Feature	Details
Coverage Amount	Up to 75% of your annual salary
Tax Relief	20% or 40% tax relief on premiums (at your marginal rate)
Deferred Period Options	4, 8, 13, 26, or 52 weeks
Payment Duration	Until you return to work, retire, or reach cessation age (55-65)
Tax Relief Limit	Up to 10% of your total income

How Salary Protection Works

The Claims Process

1. You become ill or injured and cannot work
2. You exhaust your employer’s sick pay entitlements
3. You wait out the deferred period (the waiting period you selected)
4. You submit a claim with medical evidence
5. The insurer pays your benefit monthly until you recover or reach retirement

Understanding the Deferred Period

The deferred period is the waiting time between when you become unable to work and when your benefit payments begin. Choosing a longer deferred period reduces your premium cost.

Deferred Period	Best For	Premium Impact
4 weeks	Limited employer sick pay	Highest premiums
8 weeks	Short employer sick pay	Higher premiums
13 weeks	Most popular choice	Moderate premiums
26 weeks	Good employer sick pay (6 months)	Lower premiums
52 weeks	Excellent employer coverage or savings	Lowest premiums

Types of Salary Protection Schemes

1. Individual Income Protection

Purchased directly by individuals from insurance providers. You own the policy regardless of employment changes.

• Portable – stays with you when changing jobs
• Tax relief claimable at your marginal rate
• Ideal for self-employed and private sector workers

2. Group Salary Protection (Employer Schemes)

Provided through your employer, often with lower premiums due to group purchasing power.

• Premium deducted from salary before tax
• Coverage ends when you leave employment
• Common in large companies and public sector

3. Union-Negotiated Schemes

Many Irish trade unions negotiate group salary protection schemes for their members, including:

• INTO (Irish National Teachers’ Organisation)
• Fórsa (Civil and Public Servants)
• PNA (Psychiatric Nurses Association)
• INMO (Irish Nurses and Midwives Organisation)

Tax Relief on Salary Protection

One of the most attractive features of income protection is the tax relief available on premiums. This significantly reduces the net cost of cover.

How Tax Relief Works

• Relief is available at your marginal tax rate (20% or 40%)
• Maximum relief is capped at 10% of your total income
• Relief applies to approved schemes only
• Benefits received are taxable as income

Example: Tax Relief Calculation

Scenario	Amount
Annual Premium (Gross)	€1,200
Tax Rate (Higher Rate Taxpayer)	40%
Tax Relief	€480
Net Cost (After Relief)	€720 (€60/month)

How to Claim Tax Relief

For Individual Policies:

1. Log into myAccount on Revenue.ie
2. Go to ‘Manage your tax for the current year’ in PAYE Services
3. Select ‘Claim tax credits’
4. Click on ‘Complete Income Tax Return’
5. Under ‘Tax credits & Reliefs’, select ‘Health’ then ‘Permanent Health Insurance’
6. You can also claim for the previous 4 tax years

Public Sector Sick Leave Scheme

Public sector employees in Ireland have statutory sick leave entitlements, but these may not provide full income replacement for extended illness.

Current Entitlements (2026)

Period	Payment	Notes
First 92 days	Full Pay	In a rolling 1-year period
Next 91 days	Half Pay	In a rolling 1-year period
Maximum total	183 days paid	In a rolling 4-year period

Critical Illness Protocol (CIP)

In exceptional circumstances involving serious illness or injury, extended sick leave may be granted:

• Up to 6 months (183 days) on full pay in a rolling 1-year period
• Followed by up to 6 months (182 days) on half pay
• Requires supporting medical evidence

Private Sector Statutory Sick Leave

Since 2023, private sector employees have statutory sick leave entitlements under the Sick Leave Act 2022. As of 2026:

Entitlement	Details
Days per Year	5 days
Payment Rate	70% of gross earnings
Daily Cap	€110 per day
After Statutory Leave	Move to Illness Benefit (if eligible)

Why You Need Salary Protection

The Income Gap

Without salary protection, your income drops dramatically after exhausting employer sick pay:

• State Illness Benefit: €244 per week (maximum) for up to 2 years
• Self-employed have no State Illness Benefit entitlement
• Average income protection claim lasts over 7 years

Who Needs Income Protection Most?

• Self-employed individuals with no employer sick pay
• Private sector workers with limited statutory sick leave
• Anyone with a mortgage or significant financial commitments
• Single-income households
• Those in physically demanding occupations

Indicative Costs

Premium costs vary based on age, salary, occupation, and health. Here are typical monthly costs (after tax relief at 40%):

Age	Salary	Net Monthly Cost*
30	€45,000	~€40
35	€60,000	~€60
40	€60,000	~€65
45	€80,000	~€90

*Indicative costs only. Actual premiums depend on individual circumstances, occupation, health status, and chosen deferred period.

Income Protection Providers in Ireland

Major providers offering income protection in Ireland include:

• Irish Life Assurance
• Aviva Life & Pensions Ireland
• Zurich Life
• New Ireland Assurance
• Royal London Ireland

Union schemes are typically administered by Cornmarket Group Financial Services and underwritten by Irish Life Assurance.

Important Considerations

What Income Protection Does NOT Cover

• Redundancy or unemployment
• Pre-existing conditions (depending on policy terms)
• Self-inflicted injuries
• Working in a second job while claiming

Key Questions to Ask

• What is the definition of disability? (Own occupation vs any occupation)
• What deferred period best matches my employer’s sick pay?
• Is indexation included to protect against inflation?
• What rehabilitation or return-to-work support is offered?
• Are there any exclusions or waiting periods for specific conditions?

Summary

Salary Protection provides essential financial security when illness or injury prevents you from working. Key takeaways:

• Cover up to 75% of your salary
• Get 20-40% tax relief on premiums
• Choose a deferred period that matches your employer sick pay
• Essential for self-employed and private sector workers
• Compare providers and check union schemes for better rates

Frequently Asked Questions

What is a Salary Protection Scheme in Ireland?

A Salary Protection Scheme (also known as Income Protection Insurance) provides a replacement income of up to 75% of your salary if you cannot work due to illness or injury. It kicks in after your employer’s sick pay ends and can continue until you return to work or reach retirement age.

How much tax relief can I get on income protection in Ireland?

You can claim tax relief on income protection premiums at your marginal tax rate (20% or 40%), up to a maximum of 10% of your total income. For example, if you pay €100 per month and are a 40% taxpayer, your net cost is only €60 per month after tax relief.

What is the public sector sick leave entitlement in Ireland 2026?

Public sector employees are entitled to 92 days on full pay in a rolling 1-year period, followed by 91 days on half pay, subject to a maximum of 183 days paid sick leave in a rolling 4-year period. The Critical Illness Protocol may extend this for serious illness.

What is statutory sick leave in Ireland 2026?

Private sector employees are entitled to 5 days of statutory sick leave per year, paid at 70% of gross earnings up to a maximum of €110 per day. After exhausting statutory sick leave, employees may be eligible for State Illness Benefit.

What is a deferred period in income protection?

The deferred period is the waiting time between when you become unable to work and when benefit payments begin. Options typically include 4, 8, 13, 26, or 52 weeks. Choosing a longer deferred period reduces your premium cost.

Does income protection cover redundancy?

No, income protection does not cover redundancy or unemployment. It only pays out if you are employed but unable to work due to illness or injury. You need to be in employment to make a claim.

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This guide is for informational purposes only. Consult a qualified financial advisor for personal advice. Last updated: February 2026.

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