Introduction

In an ever-changing economic landscape, financial stability is a growing concern for many in Ireland. While the country's unemployment rate stood at 4.1% in April 2025, indicating a relatively stable job market, unforeseen events can quickly alter this scenario. The security many workers feel today can be eroded tomorrow by factors far beyond their control.

Global disruptions such as pandemics, wars, and economic policy shifts in major economies can ripple through the Irish market. Ireland, as a small and open economy, is particularly sensitive to global financial shocks and geopolitical tensions. For example, the recent rise in protectionist policies and trade disputes has increased uncertainty for exporters, manufacturers, and service-based industries. This is highlighted in the recent announcement of 300 job losses in Limerick by US pharma company Carelon.

Global Volatility and Economic Uncertainty

The global economy is currently facing a period of heightened volatility. Central banks are battling inflation, supply chains remain fragile post-pandemic, and political instability in key markets adds another layer of risk. For Ireland, this means that industries such as pharmaceuticals, tech, and agri-food, heavily reliant on international trade face considerable exposure.

The re-election of Donald Trump to the U.S. presidency in 2025 could also have significant economic consequences. Trumps imposed tariffs on European Union goods, have a direct impact on Irish exports. According to industry analysts, these tariffs continue to target key sectors such as pharmaceuticals, technology, and agriculture, all pillars of the Irish economy.

Tariffs and retaliatory trade measures often lead to job losses, particularly in export-dependent regions. Increased operational costs, reduced competitiveness, and lowered demand for Irish products would inevitably trickle down to workers and businesses alike. In this climate, financial planning becomes not just prudent but essential.

Income Protection Insurance becomes a crucial part of that planning. It provides a lifeline during unpredictable times, ensuring that even if your income is interrupted, your financial obligations can still be met. This policy helps you weather economic downturns with resilience and peace of mind.

What is Income Protection Insurance?

Income Protection Insurance is a policy designed to provide a regular income if you're unable to work due to illness or injury. Unlike other insurance types that offer lump-sum payments, this policy ensures a steady income stream, typically up to 75% of your gross earnings, until you can return to work or reach retirement age (Aviva Ireland).

In Ireland, the standard sick pay entitlement is limited, making it challenging for individuals to cover their living expenses during extended periods off work. Income Protection Insurance fills this gap, offering financial support when it's most needed.

Benefits of Income Protection Insurance

Financial Stability During Unemployment

The primary advantage of Income Protection Insurance is the assurance of a continuous income during periods when you're unable to work. This financial support helps cover essential expenses such as mortgage payments, utility bills, and daily living costs, preventing the accumulation of debt.

Tax Relief on Premiums

In Ireland, premiums paid towards Income Protection Insurance are eligible for tax relief at your marginal rate, which can be up to 40%. This incentive reduces the overall cost of the policy, making it a financially savvy choice for many.

Support Services

Many insurers offer additional support services, including rehabilitation programs, counselling, and medical advice, to assist policyholders in their recovery and return to work.

Peace of Mind

Knowing that you have a financial safety net provides immense peace of mind. It allows you to focus on recovery without the added stress of financial burdens.

How Income Protection Insurance Works

Upon purchasing an Income Protection policy, you select a deferred period, which is the time between when you stop working and when the policy starts paying out. Common deferred periods in Ireland are 8, 13, 26, or 52 weeks.

If you become unable to work due to illness or injury, after the deferred period, the policy begins to pay a regular income, typically up to 75% of your gross earnings. These payments continue until you return to work, reach retirement age, or the policy term ends.

It's important to note that while the premiums are tax-deductible, the benefits received are subject to income tax.

Real-Life Examples of Income Protection Insurance

Case Study 1: Self-Employed Consultant

John, a 40-year-old self-employed consultant in Dublin, suffered a severe back injury, rendering him unable to work for several months. Without access to employer sick pay, John's Income Protection policy provided him with 75% of his average income, allowing him to cover his mortgage and daily expenses during recovery.

Case Study 2: Office Worker

Maria, a 35-year-old office worker, was diagnosed with a chronic illness requiring extended treatment. Her employer's sick pay covered only the initial weeks. Her Income Protection Insurance ensured she received a steady income throughout her treatment period, alleviating financial stress.

The Importance of Income Protection in Ireland's Economic Climate

As mention, Ireland's economy, while robust, is not immune to global economic shifts. Recent discussions around potential US tariffs on EU goods have raised concerns about job security, especially in sectors heavily reliant on exports. Such economic uncertainties highlight the importance of having a financial safety net.

Moreover, According to a recent report by Reuters business news, Ireland's reliance on foreign multinational taxes grew in 2024, with foreign multinationals contributing a record 88% of Ireland's corporate tax revenue. This dependence underscores the potential vulnerability of the Irish economy to global corporate decisions.

Now is the time to get protected

Income Protection Insurance is more than just a policy; it's a proactive step towards securing your financial future. In an unpredictable economic environment, it offers the reassurance that you can maintain your standard of living, even when unforeseen circumstances prevent you from working.

At Dolmen Insurance, we understand the unique challenges faced by individuals in Ireland. Our team, lead by Áine Derham, is dedicated to helping you find the right Income Protection policy tailored to your needs. Contact us today to safeguard your financial well-being.

Dolmen Insurance is the leading independent insurance brokers in Ireland,  explore the benefits of bundling your insurance cover. From Mortgage Protection to Life Insurance, home insurance or car insurance we have you covered.

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*While all information in this blog post is correct at the time of writing, changes can affect this. The information provided may not reflect individual circumstances and policies, and it is recommended that you speak with a qualified insurance broker for personalised advice.

Note: This blog post is for informational purposes only and does not constitute financial advice. Please consult with a financial advisor for personalised recommendations.