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Which is better Serious Illness or Income Protection?


There is no single right answer to this question. As with other areas of financial planning, it depends on your own individual circumstances. What is your occupation, your financial situation, your life stage, do you have dependants and what are your financial goals? These are just some of the questions which can help you answer which product is better for you.

In summary, Income Protection and Serious Illness are both types of insurance plans designed to provide financial security in times of need. While they share the goal of safeguarding you against financial hardships, they differ significantly in their scope, benefits, and the scenarios they are designed to address.

The Differences

The main difference is that Serious Illness cover pays a once-off lump sum when you claim. Whereas Income Protection pays a regular income. There are also differences in the way tax is treated on both the premiums and benefit. In addition, there are also a range of other differences that need to be considered.

Income Protection

Income protection cover primarily focuses on replacing a portion of your income if you’re unable to work due to illness or injury. This product usually pays out a percentage of your regular income, ensuring you have a steady stream of money to cover essential expenses such as mortgage or rent, bills, and daily living costs. The payout is generally a monthly benefit and continues until you can return to work, retire, or until the policy term ends.

Serious Illness Cover

On the other hand, serious illness cover provides a lump sum payment if you are diagnosed with a specific serious illness listed in the policy conditions. These illnesses would usually include cancer(s) and heart conditions as well as illnesses like MND and Dementia. Unlike income protection, serious illness cover doesn’t replace lost income but provides a one-time lump sum payment upon diagnosis of a covered condition. This payment can help ease the financial burden of medical expenses or adjustments to your lifestyle, such as modifying your home for accessibility or seeking specialized treatments.

Serious Illness Income Protection
Pays a lump sum Pays a regular income
Covers only the illnesses specified in your plan Covers any illness, injury or disability that prevents you from working
Tax relief is not available on your premiums Tax relief is available on your premiums
Benefit payments are tax free Benefit payments are taxed
The plan stops once you have claimed You can claim as many times as you need (once you continue to pay premiums)
Cover available regardless of your occupation Cover is occupation dependent


As you can see from the above, there are important key differences between the two types of products. Combine these with your own requirements and you’ll see that there are many factors to be considered. When considering which type of cover to choose you need to consider the type of financial protection you need, the scope of coverage provided by the product, the cost and amount and duration of cover payment.


Choosing between income protection cover and serious illness cover will depend on your individual circumstances, financial needs, and risk tolerance. Both products serve crucial roles but differing roles in providing financial security. We can help you better understand what each cover will provide for you, and which will better meet your own requirements. Just contact us at Coleman Financial Planning to have a chat.

What claims tell us about protection

In 2021, over 40% of the advice I provided to our clients was in the areas of personal, family or business protection. The specific needs being:

  • Mortgage Protection
  • Income Protection
  • Family Protection (i.e. Life Insurance & Specified Serious Illness Cover)
  • Shareholder Protection

I firmly believe that everyone should have a plan in place to provide financial security should something happen to them. I recently carried out a review of the Life Insurance market to assess what benefits were paid out in 2021. My findings, which I’ve outlined below, show just how important this can be to an individual and their family as we never know what life has in store for us.

Life Cover

  • The average of age of claims on death was 66
  • 46% of death claims were cancer related, 13% heart related

Specified Serious Illness Cover

  • Industry average age of claim for men was 54
  • Industry average age of claim for women was 52
  • 41% of claims for men were cancer related and 33% heart related
  • 78% of claims for women were cancer related (of which an average of 32% of cancer claims were on the diagnosis of breast cancer).

Source: Aviva Protection Claims 2021

Income Protection

  • Industry average age of claimant was 49
  • Reason for claim
    • Mental Health/Psychological = 24%
    • Musculoskeletal = 21%
    • Cancer = 19%

Source: Irish Life 2021 Protection Claims


I think the findings are very stark and show that it is a necessary element of a robust financial plan. No amount of money will relieve the upset of an unexpected death, illness or accident. But with proper planning you can alleviate the financial concerns a tragic event like this may bring.

If you’d like to talk about creating your individual plan just get in touch today.