Can Bonuses & Commission Be Included in Income Protection?

10-second summary: Some bonuses and commission can be included in income protection in Ireland, but only in specific circumstances. What matters is how regular the income is, how it is taxed, and how it can be proven. Getting this wrong can leave you under-insured or disappointed at claim stage.

If part of your income comes from bonuses, commission, or variable pay, this is one of the most important income protection questions you can ask.

It is also one of the most misunderstood.

This page explains, in plain English, what usually counts, what usually does not, and where people get caught out.

The short answer

Yes, bonuses and commission can sometimes be included in income protection.

But not all bonuses are treated the same.

Insurers care far more about how predictable and provable your income is than the job title on your contract.

What insurers are trying to insure

Income protection is designed to replace income you can reasonably expect to continue earning if you stay healthy.

Because of that, insurers focus on income that is:

• regular
• taxed as income
• provable over time

Anything that is irregular, discretionary, or difficult to evidence is treated with caution.

Types of bonus and how they are treated

Guaranteed bonuses

If a bonus is written into your contract and paid consistently, it may be treated as part of your income.

In practice, fully guaranteed bonuses are rare.

Regular commission or OTE

This is where most sales professionals fall.

If you receive commission or OTE that:

• is paid frequently
• appears consistently on payslips
• is taxed through PAYE
• can be supported by past earnings

then some insurers will allow part of it to be included.

This is not automatic. Evidence matters.

Discretionary or irregular bonuses

Discretionary bonuses are the hardest to include.

If the employer can decide whether to pay it, or the amount varies wildly year to year, insurers are unlikely to count it as insurable income.

This is where expectations and reality often diverge.

One insurer goes a step further on confirmed income

One insurer we work with allows income to be locked in at application stage, based on payslips and earnings evidence provided upfront.

Once that income is agreed, it is used as your reference income going forward, even if your earnings fluctuate or drop later.

This can be extremely valuable if your income is irregular or commission-heavy.

Why this matters in the real world

Without this structure, someone whose income dips before a claim can end up with a much lower benefit than they expected.

With this approach, the insurer does not reassess your income just because:

• a sales year is quieter
• commission structures change
• you move role or territory
• the market turns temporarily

Your benefit is based on what you proved you were earning when you were healthy and working normally.

Who this tends to suit best

This approach is particularly useful for people whose income is:

• commission-led
• bonus-heavy
• variable year to year
• strong now but unpredictable later

It is not necessary for everyone, and it is not always the cheapest option.

But for the right person, it removes one of the biggest uncertainties around income protection claims.

How much income can be insured

Even when bonuses are allowed, there are limits.

In Ireland, income protection usually covers up to 75 percent of your normal earnings (less state illness benefit if you are PAYE)

Over-estimating income at application stage is one of the easiest ways to create problems later.

What happens at claim stage

This is the part most people never think about.

If your policy is not on a confirmed income basis, insurers will look at your income in the twelve months before you stopped working.

If bonuses or commission had dropped, or were not being paid at that point, the benefit may be lower than expected.

That’s why it’s important to keep an eye on your income as it changes, rather than assuming what you earned when you took the policy will always be the right figure.

Common mistakes we see

• assuming all commission is automatically covered
• using best year earnings instead of typical earnings
• not understanding how claims are assessed
• buying cover that looks good on paper but disappoints in reality

The sensible next step

If bonuses or commission form a meaningful part of your income, it is worth getting this checked properly before applying.

If you want help, you can complete our income protection questionnaire and we will look at your situation in confidence.

That way, you know what will actually count before anything is submitted to an insurer.

Thanks for reading

Nick