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You’ve worked hard to build your business, keep clients happy, and maybe even support your family. But what would happen if you couldn’t work due to an illness or injury?
Unlike employees, there’s no sick pay or company safety net when you’re self-employed. You are the business. So if you can’t work, you might not earn. That’s where income protection comes in, and it could be one of the most important types of cover you ever take out.
What Is Income Protection?
Income protection is an insurance policy that pays you a monthly income if you’re unable to work due to illness or injury. It’s a policy designed to help you pay your bills, such as your mortgage, household bills, groceries, and other daily expenses.
While you focus on recovery, income protection gives you the financial support you need to stay afloat and avoid dipping into savings or falling behind on payments.
Are Self-Employed People Eligible for Illness Benefit?
Most self-employed people in Ireland can’t get Illness Benefit because they pay Class S PRSI, which doesn’t qualify for it. Illness Benefit is mainly for employees who pay Class A or Class H PRSI.
One exception: Share fishermen and women paying Class P PRSI may be eligible for it for up to a year.
If you’re self-employed and get sick or injured, you might qualify for other supports like Disability Allowance or Invalidity Pension, but only in certain cases. These are for people with long-term, severe conditions that make working impossible, so not everyone will be eligible.
That’s why it’s so important to have an income protection policy in place to make sure you can still pay your bills if you can’t work due to illness or injury.
Why Do Self-Employed People Need Income Protection?
There are 352,300 self-employed individuals in Ireland, each relying on their ability to work to generate income. Unlike employees who may receive sick pay or other supports, self-employed people don’t have a built-in safety net if they’re unable to work due to illness or injury.
When you’re self-employed, you’re your own safety net. If you stop working due to an illness or injury:
- Your income might stop.
- Your business might still bring in a little at first, but eventually it will take a hit.
- Savings? Sure, but how long would they last?
With so many people now working for themselves, income protection isn’t just a good idea — it’s an essential part of protecting your finances and your future.
How Does Income Protection Work for the Self-Employed?
Income Protection is designed to give you financial support when you can’t earn a living due to illness or injury. Here’s how it works, step by step:
- You choose how much of your income you want to protect (up to 75%).
- You choose your deferred period — how long you wait before payments begin (standard options are 4, 8, 13, 26, or 52 weeks).
- If you become ill or injured and can’t work, you submit a claim to your provider.
- Once your deferred period ends, you’ll start receiving monthly payments — these continue until you’re well enough to return to work, you retire, or your policy term ends.
When you’re the boss, there’s no backup plan — unless you have one.
How Much Does Income Protection Cost?
The cost of income protection can vary from person to person because it’s tailored to your unique situation. Providers look at several factors to calculate your premium, including your age, overall health, and what kind of work you do.
The more income you want to protect and the sooner you want payments to start if you make a claim, the higher the cost may be. Here’s what affects the price:
- Your age
- Health and medical history
- Occupation (some jobs are riskier than others)
- How much of your income you want to protect
- Your deferred period (the waiting time before payments start)
What Is a Deferred Period?
A deferred period is the waiting time between when you become unable to work and when your income protection payments begin. It’s a key part of your policy, and it affects how much you’ll pay for cover.
The longer the deferred period you choose, the lower your monthly premium will be — but it also means waiting longer before you start receiving payments. It’s important to pick a period that matches your financial cushion or savings. Standard deferred period options include:
- 4 weeks
- 8 weeks
- 13 weeks
- 26 weeks
- 52 weeks
If you have a financial buffer (e.g. savings), a longer deferred period might suit you. If you need money quicker, a shorter one is better (but costs more).
Can Self-Employed People Claim Tax Back on Income Protection?
Yes! If you’re self-employed and take out a personal income protection policy, you can claim tax relief at your marginal rate (up to 40%) on your premiums. That makes it even more affordable and a wise financial decision.
How Much Income Protection Do You Need?
How much income protection you need depends on your lifestyle and monthly expenses.
Ask yourself: What are your essential bills each month — like rent or mortgage, groceries, utilities, and loan repayments? Do you have dependents relying on your income?
You can protect up to 75% of your annual income, up to a maximum of €262,500 per year.
Does Income Protection Cover Mental Health?
Yes, most income protection policies cover mental health conditions.
Mental illness is now one of the top reasons people claim income protection. According to the Aviva Protection Claims Report 2024, 30% of all income protection claims were for psychological reasons, ahead of orthopaedic issues (24%) and cancer (20%). The report also showed that 33% of women claimed mental health-related conditions, compared to 27% of men.
Some providers, like Aviva, also offer mental health support, including counselling at no extra cost as part of their policy benefits.
Executive Income Protection vs. Self-Employed Income Protection: What’s the Difference?
If you’re self-employed or running your own company in Ireland, it’s important to pick the right type of income protection, and it depends on how your income is structured.
Personal Income Protection
Personal Income Protection is designed for sole traders or self-employed individuals who do not receive a salary, as employees typically do.
Key features:
- The policy is taken out in your own name.
- Premiums are paid personally (not through a company).
- You can claim tax relief at your marginal rate (up to 40%) on your premiums.
- If you need to claim, the benefit is paid directly to you, after tax and USC.
- Ideal for people who don’t run their business through a company or pay themselves a PAYE salary.
Executive Income Protection
Executive Income Protection is designed for company directors or business owners who pay themselves a salary through their company.
Key features:
- The company takes out and pays for the policy on your behalf.
- Premiums are treated as a business expense so that the company can claim tax relief.
- If you claim, the income is paid to the company and then passed to you through payroll.
- It can also cover pension contributions (up to 35% of salary or €50,000, whichever is lower).
- Best for directors and key employees.
Which One Should You Choose?
- If you’re a sole trader, go for Personal Income Protection.
- If you own a limited company and take a salary, consider Executive Income Protection for tax efficiency and broader benefits.
If you’re not sure which income protection option is right for you, our financial advisors can help. They’ll look at your specific setup and tax situation and guide you towards the policy that fits your needs and budget best.
One illness could stop your income. Get a personalised quote today!
Get an Income Protection Quote
As a self-employed individual, you’re already used to planning ahead, and having a financial safety net should be part of that plan. Income protection is an essential piece of your financial toolkit, giving you peace of mind if illness or injury ever stops you from working.
We know it’s a big decision, and the options can feel overwhelming. That’s why speaking with one of our financial advisors can make all the difference. They’ll help you find a plan that suits your needs and budget. When you rely on your income to keep everything going, protecting it isn’t just smart — it’s essential. Get an Income Protection quote today!
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
