Income Protection for the Self-Employed in Ireland: The Complete 2026 Guide

Income Protection for the Self-Employed in Ireland: The Complete 2026 Guide

Being your own boss comes with incredible freedom - no more answering to managers, setting your own schedule, and keeping what you earn. But there's a flip side that keeps many self-employed people awake at night: what happens if you get sick or injured and can't work?

Unlike employees who get sick pay from their employer, when you're self-employed, your income stops the moment you can't work. No safety net. No cushion. Just bills that keep coming.

That's where income protection insurance becomes essential. Let's break down everything you need to know about protecting your income in 2026.

Why Self-Employed Workers Need Income Protection More Than Anyone

Here's the uncomfortable truth: roughly 340,000 people in Ireland are self-employed, and most of them are one serious illness away from financial crisis.

When you leave traditional employment, you wave goodbye to several safety nets:

• No sick pay - Your employer isn't going to cover you when you're out
• No automatic access to state illness benefit - Self-employed people don't necessarily qualify for this support
• No company income protection scheme - That group policy from your old job? Gone

According to the CSO, workers over 35 have a one-in-six chance of being out of work for more than six months due to accident or injury. If you're self-employed, that's six months of zero income while your mortgage, bills, and living expenses continue as normal.

Your income isn't just a paycheck - it's your entire business. Without it, everything stops.

What Is Income Protection Insurance?

Income protection is a policy that replaces your salary if illness or injury prevents you from working. Think of it as sick pay you buy for yourself.

Here's how it works:

1. You pay a monthly premium while you're healthy and working
2. If you become unable to work due to illness or injury, you make a claim
3. After a waiting period (called the "deferred period"), the insurance starts paying you a regular monthly income
4. Payments continue until you're well enough to return to work, or until the policy term ends

The policy covers pretty much any medical condition that stops you working - from back injuries and broken bones to cancer, heart disease, mental health issues, and everything in between.

How Much Income Can You Protect?

You can insure up to 75% of your gross annual income. You don't have to cover the full amount if your budget doesn't stretch that far, but 75% is the maximum allowed.

Here's a practical example:

Meet Sarah, a self-employed graphic designer:

• Annual income: €60,000
• She insures 75% of her income: €45,000
• Monthly benefit: €3,750
• She chose a 13-week deferred period

Two years into her policy, Sarah is diagnosed with a serious illness requiring extensive treatment. After the 13-week waiting period, she receives €3,750 per month for the full 18 months she's unable to work. That's €67,500 in total - enough to cover her mortgage, bills, and living expenses while she focuses on recovery.

The Tax Relief Game-Changer: Making It Affordable

Here's where income protection gets really interesting for self-employed people: you get tax relief on the premiums you pay - and the rate depends on your business structure.

Tax Relief for Sole Traders and Partnerships

If you operate as a sole trader or in a partnership, you can claim tax relief at your marginal rate (20% or 40%) on the premiums you pay.

If you're paying tax at 40%, the government effectively pays 40% of your premium. This makes income protection significantly more affordable than most people realize.

Real Cost Example for Sole Traders:

• Monthly premium: €100
• Annual cost: €1,200
• Tax relief at 40%: €480 back
• Actual net cost: €720 per year (or €60 per month)

Tax Relief for Company Directors: Even Better

If you're a company director, the tax benefits are even more attractive - you can achieve an effective relief rate of up to 52%.

Here's how it works:

When the company pays your income protection premium directly (rather than you paying it personally), you get:

• Relief from income tax (20% or 40%)
• Relief from USC (up to 8%)
• Relief from PRSI (4%)
• The premium is allowable against Corporation Tax (12.5%)

Real Cost Example for Company Directors:

• Monthly premium: €100
• Annual cost: €1,200
• Effective tax relief at 52%: €624 back
• Actual net cost to the company: €576 per year (or €48 per month)
• Plus Corporation Tax relief: Further reduces the true cost

This is a significantly better deal than personal policies, making income protection one of the most tax-efficient benefits a company can provide for its directors.

That's less than most people spend on streaming services or their morning coffee habit - for protection that could save your entire livelihood.

You claim the tax relief through Revenue.ie's MyAccount service (for sole traders/partnerships) or as a business expense (for companies). It's straightforward, and you can even claim back for previous years if you've been paying premiums but forgot to claim relief.

How Much Does Income Protection Really Cost?

The cost depends on several factors:

• Your age - Younger people pay less
• Your occupation - Desk jobs cost less than high-risk roles
• Your income - Higher income means higher premiums
• Deferred period - Longer waiting periods reduce costs
• Smoking status - Smokers pay roughly 50% more
• Health history - Pre-existing conditions may affect pricing

Sample costs (after tax relief at 40%):

• 30-year-old earning €45,000: Around €25-35 per month
• 40-year-old earning €60,000: Around €45-65 per month
• 50-year-old earning €80,000: Around €75-95 per month

These are guideline figures using many assumptions - your actual cost will depend on your specific circumstances. Contact QuoteLeader.ie for a quote based on your exact circumstances.

Proving Your Income: What You Need to Know

Unlike employees with regular payslips, proving income works differently depending on your business structure.

For Sole Traders and Partnerships

Your income can fluctuate significantly, so when you claim, insurers will ask for comprehensive proof of your earnings.

Most insurers require:

• Tax returns from the previous 12-36 months
• Accountant's statements
• Business bank statements
• Revenue documents showing declared income

Some insurers average your income over three years, while others only look at the most recent 12 months. This matters if your income varies significantly year to year.

For Company Directors

The process is much simpler - similar to regular employees. You just need to provide evidence that your salary is no longer being paid, typically:

• Letter from the company confirming cessation of salary payments
• Payslips showing the salary that has stopped
• Company accounts (in some cases)

This streamlined approach makes claims easier for company directors compared to sole traders.

Important: If your income drops during the policy term, contact your insurer to reduce your coverage. They'll never pay out more than 75% of what you were actually earning at the time of your claim.

Choosing Your Deferred Period: The Waiting Game

The deferred period is how long you wait after becoming unable to work before payments start. Common options are:

• 4 weeks - Highest premiums, fastest payout
• 13 weeks - Popular middle ground
• 26 weeks - Lower premiums, longer wait
• 52 weeks - Cheapest option, requires substantial savings

Most self-employed people choose 13 or 26 weeks. The question to ask yourself: "How long could I survive without income using savings or support from family?"

The longer you can wait, the lower your premium - but make sure it's realistic for your situation.

Income Protection vs. Just Having Savings

"Why not just build up savings instead?" It's a fair question.

Here's the reality check:

• Building sufficient savings takes years of discipline
• Medical emergencies often come with extra costs (treatments, equipment, home modifications)
• Long-term illnesses can last years - the average claim length is over 7 years
• Savings earmarked for other goals (retirement, kids' education, house deposit) get raided
• Once savings are gone, they're gone

Income protection isn't instead of savings - it works alongside them. Use your savings to cover the deferred period, then let insurance take over for the long haul.

How to Get Income Protection as a Self-Employed Person

The process is straightforward:

1. Assess your needs - Calculate your essential monthly expenses
2. Get quotes - Compare offerings from Irish insurers (Irish Life, Zurich, Royal London, Aviva, New Ireland)
3. Decide on coverage amount - Usually 60-75% of income
4. Choose your deferred period - Based on your savings buffer
5. Complete medical questionnaire - Be honest about health history
6. Medical screening (if required) - May be needed depending on age and health
7. Policy issued - Usually within 2-4 weeks

Work with a broker who understands self-employed income protection. They'll help navigate the different providers and find the best fit for your occupation and circumstances.

What Income Protection Doesn't Cover

It's important to know the limitations:

• Redundancy or business failure - Only illness/injury is covered
• Pre-existing conditions (usually) - Conditions you had before taking out the policy may be excluded
• Intentional self-harm
• Criminal activities
• War or terrorism in certain circumstances

Also worth noting: if you become unemployed, your policy typically pauses. Some insurers offer benefits that allow limited cover during unemployment, but standard policies require you to be in work.

The Bottom Line: Is It Worth It?

For self-employed people, income protection isn't a luxury - it's fundamental risk management.

Consider this: you insure your car, your home, and your phone. Your income is worth more than all of those combined. It funds everything in your life. Without it, your lifestyle collapses.

With tax relief reducing the real cost by up to 40%, income protection becomes one of the most cost-effective forms of financial protection available. You're essentially getting the government to subsidize your safety net.

The younger and healthier you are when you take it out, the cheaper it'll be. Waiting until you're older or have health issues makes it more expensive - or potentially unavailable.

Next Steps

If you're self-employed and don't have income protection, here's what to do:

1. Calculate your essential monthly expenses
2. Check what you could afford to cover (50-75% of income)
3. Request quotes from Irish providers
4. Compare deferred periods and coverage options
5. Set up a policy while you're healthy

Remember: insurance is best bought before you need it. Once you're diagnosed with a serious condition, it's too late to get coverage for that condition.

Your income is your most valuable asset. Protect it accordingly.

Ready to protect your income? Get a free, no-obligation quote from Ireland's leading income protection providers. Compare policies and see your real cost after tax relief in minutes.