Life Protection Cover

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A Simple Breakdown of the Various Life Covers in Ireland and How to Pick the Best One

Life Cover, also called Life Insurance is intended to assure oneself that the insurance company will pay a lump sum to protect your family financially in case of any uncertainty. All that you need to think of is, how much should be the sum assured, for how long you want your life insured, amount of premium you can manage to pay, and whether you want to pay annually or monthly.

Why do you need a Life Cover?

Let’s face it. None of us can predict the future accurately; and no matter which crystal ball you gaze into, the future still remains largely unknown. Wouldn’t it make sense to know that your family is taken care of financially, in the event of an untoward instance? We all have our loved ones and we don’t want them to suffer financially even after our death. We would like them to be financially independent to meet their immediate needs so that life is not too difficult for them, long after we’re gone.

Being an earning member and providing for the family, it’s only logical to look out for their well-being and protect them. A young mother’s death may require help to the family to take care of the kids in her absence. One may have taken a mortgage for their home; and in case of an unfortunate death of the person, a life cover is essential to ensure repayment of the loan.

Especially if you’re availing a mortgage to purchase a house, your lender needs to ensure you have a Mortgage Protection Policy as per Section 126 of the Consumer Credit Act 1995 of Ireland. Thus, all mortgage organisations require an insurance cover to avoid default of loans in the unlikely death of the person seeking a mortgage.

Funeral costs for final rites are an urgent and imminent need that a life cover will provide for. The family of the patient suffering critical ailments before death, will need to meet the hospital expenses later on, which can be covered.

The main advantage of a life cover is the peace of mind it provides to the head of the family, and assurance about the welfare of his/her loved ones on unfortunate demise.

 

What are the Choice of Policies available?

In Ireland, the following choices are available to a person interested in safeguarding his/her family’s interests.

  1. Decreasing life cover:

The amount of cover and its cost reduces every year as the policy is nearing maturity. This policy is preferred when it is availed for a mortgage on a loan.

  1. Term life insurance:

This is chosen when you want to insure your life for a certain period of time, which could be for 5 years or a specified period. This may work out cheaper for the individual as it is not a whole life policy.

  1. Life-long insurance:

This kind of policy provides insurance throughout one’s life and hence it costs more. This can be taken to pay inheritance tax too.

  1. Mortgage Insurance:

This is required by mortgage companies to repay the loan in the event of the death of the loanee.

  1. Pension life insurance:

This is taken out to provide a pension after the retirement of a person so that there is money to manage life till death.

 

Life Insurance Cover in Ireland in Numbers:

Insurance Ireland, in its Factfile report of 2016, states that €8,745m was paid out by life insurance companies in the country in 2016, which includes payment of: mortgages, income, and payouts for policyholders, annuity income, and lumpsum payouts.

Irish Life, in its latest annual claims report, has published that it has paid out nearly €130 million just in death claims that translates to 98% of successful claims.

Bank of Ireland paid out Life Insurance payments amounting to €105 million in 2016, with €52,400 being the largest payout.

New Ireland Assurance rolled out its 2017 Claims Statistics report, which mentions €70.5 million of life cover payments were made and the average claim amount being €51,358.

As stated by this article, Ireland’s Department of Finance has decided to look into the existing life insurance policies in order to protect the interests of the customers by reducing the premiums.

Also, this source points out that the Insurance Premiums are being lowered than ever before, when compared to someone who had taken out a cover during the pre-2008 ‘boom years’.

Thus, it’s probably the best time to go out and get a life cover to keep your family safeguarded and also avail lower premiums.

 

Tips When Choosing Life Cover:

When you decide to get a life cover, these are what you need to take care of:

  • Try to buy a life cover as early as possible in your life. Older you are, costlier is your policy.
  • Decide on how much you need? This is the most important decision. You need to think about inflation. Think of a reasonable amount your family will need after the period for which you have insured your life. In general, it is advised to get a life cover whose total amount equates to 2/3rd of your net annual income multiplied by the number of years you have till retirement.
  • Find an independent insurance advisor to help you make your decision about the company you insure in, the amount you would like to insure for, the period and the costs involved, and the plan most suitable for you. Generally, insurance marketers try to convince you on plans that is most profitable for them.
  • Compare between policies to decide which benefits you more based on your immediate and forecasted needs.
  • Think before you leap! Discuss with your spouse or family members before you make your decision.
  • As your mortgage provider requires you to have a life cover policy, they might push you to go for a certain cover that may not always be in your best interests. Always do your research first and never accept one blindly suggested by your mortgage provider.

 

Get the Best Insurance Advice from a reputed Insurance Broker

Going through the various life cover policies can be hard, time-consuming & also confusing on a lot of levels. When you speak to an established Insurance Broker, the advisors look to alleviate all your concerns and provide you unbiased, ethical, and legal advice on getting the best policy that is suited to your individual requirements.

Murray Financial Services has been in the business of saving people money for over 10 years by giving out practical financial advice for people looking to buy Life Cover. You can also bank on their Financial services, pertaining to Personal Pension Plans, Personal Retirement Savings Accounts, and even Mortgage Consultations.

At Murray Financial Services, we always keep your priorities above and beyond everything we do, so you get the maximum benefits with a Life Cover in the way of reduced costs and tax savings.

Call 091 740700 or visit https://mfs.ie to understand the finer points of getting a Life Insurance Cover and leverage the expertise of our financial advisors.

 

 

Income Protection

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Why Should You Consider Income Protection Cover?

The need to protect your income is something that cannot be sidetracked or put on suspension mode. In slightly ominous overtones, it would be unwise to brush aside the thought of today’s perfect health, turning into some unexpected and unwanted health concern, tomorrow.

Such an out of the blue health impediment can put sudden breaks on the earning capacity of any individual. This health hurdle can afflict anyone – whether you’re young, middle-aged or veering towards elderliness.  It will be an awful prospect if you would be unable to work, for a short or long span, and thereby find your income earning capacity restricted all of a sudden.

 

The Need for Income Protection

Income protection is a form of insurance coverage which helps an individual to continue availing a certain amount of regular income, even when s/he is unable to work. This is until he or she joins back to work having recovered from an impending illness. In layman terms, coverage is taken for an unexpected income loss, due to a variety of health reasons. The premium that must be paid is the cost that which will be incurred for uninterrupted continuation of the working income.

Consider these facts –

  • In 2017, Irish Life, one of Ireland’s biggest Life Assurance and Pensions Company paid €57 Million in Income Protection Claims.
  • On average, the 3,323 individuals who filed for Income Protection claims got €22,659 as they were unable to work due to illness or injury.
  • One of the biggest claim payout that Irish Life paid last year was €297,000.
  • Bank of Ireland, on the other hand, paid an average amount of €21,395 to its claimants.

Now imagine the loss of income that these people would’ve had to face had they not availed an Income Protection policy to cover them.

 

The Utility of Income Protection

There is often a tendency to overlook the apparent usefulness or utility of Income Protection. This is because most working professionals take what they conclude, is the more important form of insurance i.e. Sickness and Life. However, there is a major differentiating factor.

Serious Illness Cover encapsulates certain major illness which entails a good amount of medical expenditure and time on that specific illness. The illnesses related to income protection, though a minor irritant, can have a MAJOR impact of blocking your regular income.

The insurance proceeds from a Life Cover have its due importance to the family members, but at the terrible cost of the person no longer being alive.

Income Protection Cover, on the contrary, takes care of the family and the person while the person is alive. In that sense, it can be termed as a sort of “Happy Coverage” for the individual and his/her immediate family members.

It is a HIGH PRIORITY need for the self-employed to go for income protection since they are subject to the vagaries of irregular income and furthermore do not have social benefit coverage.

 

The Scope, Terms, and Conditions of Income Protection

The Income Protection insurance is applicable to all those persons who broadly fall into the following category:

A working individual having some form of income from a particular job or profession, and within the age group of 18 to 75 years.

The person is then affected by any form of illness that prevents them from working for a period of 4 weeks or more, thereby causing a stoppage of income.

The inability to work may be caused by ANY form of illness, health problem, injury or disability. The pre-defined illnesses do not come under part of this. The illnesses may include minor ailments like – headache, backache, stress or the more spread out cases like – fracture, stent, hip joint replacement, early chemotherapy, and also cover mental health.

 

The Amount Applicable and Other Clauses

The total coverage that the insured person can avail from the insurer will be equivalent to 75% of the total annual income.

The total insured payout amount of 75% takes into account the social benefit/medical allowance due and disbursed to the insured person. It will also consider income from any other sources. The final payout will be done post the deduction of social benefits and any other income or dividend.

 

For a simpler understanding of the calculations, here’s an example –

Say, Mr. Thomas has an income of €65,000 per annum.

He also qualifies a maximum illness benefit of €198 per week, amounting to €10,296 for the financial year.

Then, Mr. Thomas also gets income from renting his property leased at €9,000 per annum.

Then the total insured amount due will be:

€48,750 (75 % of €65,000) minus €10,296 minus €9,000 = €29,454.

 

The payout by most of the insurance companies will come in the form of monthly payments.

There will be something called as the Deferred Payments once the income protection insurance comes into effect. This is basically the time frame subsequent to when the pay-outs start getting disbursed. So basically, if the deferred payment is 4 weeks then the pay-out starts coming from the 5th week. The insurance company will set a time or the due date before which the claims form is to be submitted to them by the claimant. This varies from company to company.

The time frame of the Income ranges from the age of 18 to the age of 75. The policy maturity plan can range from 3 years to 20 years. The same can be renewed when the maturity period approaches.

There are provisions to increase the insurance amount at the end of a certain time frame by a certain percentage “escalator” amount.

For e.g.  An income protection coverage of €72,000 can be escalated with a premium of 5% at the end its maturity period of 3 years and again by 5 % after 3 more years.

Exclusions and Other Restrictions applicable  

The Medical exclusion criteria to income protection include the following –

  • Pre-existing medical conditions before the insurance approval
  • Any chronic or life-threatening disease like – heart attack, kidney failure, stage 3 cancer and above
  • Self-inflicted wounds
  • Injuries caused by any criminal act
  • Any critical body condition caused by self-neglect of health or addiction to life-threatening substances
  • War-related injuries
  • Normal pregnancy

Among the non-medical exclusions, is loss and lack of a job. This, crystal clear, DOES NOT qualify for income protection. The income protection scheme is initiated with the sole intention to protect those who have an income and the 75% clause is to incentivize employers to return to work.

Multiple policies from different insurance groups are possible but the combined insurance value cannot exceed 75% of the total income.

 

Selecting the right financial plan and the Insurance Company

As a qualified financial advisor and retirement planner, Adrian Murray has helped countless people set their finances right over a period of 10 years. Adrian and his team are dedicated to providing unbiased financial consultancy to all its clients in planning their entire income and all other coverage needs. We set the balanced mix of coverage schemes and recommend insurance companies based on their standing, the percentage of successful claims from the past financial years, and so on.

We also ensure that the companies we refer follow proper European Community standards and rules. Additionally, our recommended insurance conglomerates adhere to proactive and prompt customer service backed up with round the clock response management.

To know more about Income Protection and get yourself a cover, visit Murray Financial Services at https://mfs.ie or call 091 740700 now.