Question: Recently, one of my friends who is a full-time farmer was diagnosed with cancer and is currently in the middle of intensive treatment.

She has found one of the most challenging aspects of this is the fact that her earnings have been so negatively affected as she is unable to work and unfortunately, this situation is unlikely to change for some time.

She did not have any type of illness cover in place. This has really scared me. Can I take out some form of policy to protect my financial wellbeing in the event of falling ill and being unable to work in the future?

Answer I am so sorry to hear about your friend and I hope that her treatment is going as well as can be expected.

The diagnosis of a serious or chronic illness can have a serious mental as well as physical impact on a person, but very few stop to think of the financial impact it would have on us and our families. It is indeed a very wise decision to now consider your own situation.

Having insurance in place to cover illness or injury affecting your earnings is a crucial financial safety net for you and indeed for all farmers. It will offer peace of mind and ensure financial stability if you do get ill.

While nobody likes to dwell on the possibility of accident or illness, preparing in advance for those shocks can help you to better absorb them.

The latest Irish Cancer Society Survey on the Real Cost of Cancer revealed that it was only after their treatment that people properly assessed the financial toll cancer took on them. Most people are focused on the day-to-day medical, physical and emotional impact of their diagnosis.

It is however estimated that the average cost to a person diagnosed with cancer is €756 a month but can be over €1,000 in some cases. At the same time, people are faced with a loss in income of more than €1,500 a month on average.

The financial costs include the cost of medication, managing side effects, additional medical expenses, increased day-to-day living costs, costs associated with treatment, changes in personal care costs and one-off household purchases.

Protection versus Illness Cover

Many people get confused with the many different options available. Let me clarify the difference between Serious Illness Cover and Income Protection Cover.

Serious Illness Cover pays out a tax-free lump sum on the diagnosis of a range of specified illnesses. The list of illnesses covered varies between insurers but it usually includes heart attacks, types of cancer, multiple sclerosis, kidney failure, motor neuron disease, brain tumours and severe burns.

This tax-free lump sum can be spent however you like whether it is to maintain your standard of living (eg pay off a debt to reduce outgoings) or to help you cope during a difficult time. No tax relief applies to the premiums payable for this type of cover.

Carol Brick.

Income Protection Cover is also a very important cover and this insurance replaces up to 75% of your regular income in order to maintain the level of earnings on which you base your living.

The list of illnesses covered here is much broader in that it will cover “any non-existing illness or injury” that prevents you from being able to work and also includes stress and back-related issues.

Payment of this benefit kicks in after a certain deferred period and continues all the way to age 65, if necessary or until you are well enough to return to work.

Most people do not realise that payments to this type of plan are eligible for income tax relief at your marginal rate of tax which greatly reduces the cost. If you claim on this plan, your benefit is treated as normal income and so is assessed for income tax, PRSI and the Universal Social Charge.

Some life companies such as Zurich also offer other additional valuable benefits such as partial disability benefits for reduced capacity to work, hospitalisation benefits, rehabilitation support to aid in recovery and a very specific type of cancer cover.

Aviva have their “Best Doctors” Second Medical Opinion service which offers its protection customers a second opinion from a medical expert chosen from a well-renowned worldwide network of medical professionals.

Regarding the possible cost of these covers, it’s impossible to generalise as it varies from person to person and depends on factors such as age, smoking status and medical history.

The criteria for getting income protection insurance is dependent on occupation classes and farmers fall into Class 4 which means it is classified as an occupation that includes heavy manual labour.

It is seen that in these occupations, the risk of accident or injury is significantly higher so it can be very expensive.

It is important for farmers to have income protection in place if they are injured in a farming accident or develop a chronic illness that prevents them from working

However, Aviva have a very good product called Wage Protector which is specifically designed for people who fall into these more expensive classes. This offers cover for 24 months and is much less expensive than full income protection.

So if you’ve applied for Income Protection before and you did not go with it because it was too expensive, it is certainly worth considering talking to an adviser regarding a Wage Protector Plan.

According to some recent claim related statistics from one of Ireland’s top providers, during your income-producing years, you are nearly twice as likely to become seriously ill as you are to die prematurely.

It is so important for farmers to have income protection in place if they are injured in a farming accident or develop a chronic illness that prevents them from working.

This coverage will ensure that they are able to meet their financial obligations such as farm loans, mortgage payments, and household expenses, preventing financial stress during periods of incapacity. It offers peace of mind, while they focus on recovery.