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What is Life Insurance?

It’s not the most cheerful of subjects – but it can bring peace of mind

It’s not the most cheerful of subjects – but it can bring peace of mind

It may not be the most cheerful of subjects, but the peace of mind of having financial security for the family is a real reason to give some thought to life assurance sooner rather than later!

What is Life Insurance? 

Like home or car insurance, a life insurance policy pays out when something goes wrong, essentially in this case, the death of the insured person/s.

Does Life Insurance last for life?

It can, but most people have term assurance, which is a life insurance plan that covers you for a specified amount over a specified term.  In the event of death within the fixed time period, a cash lump sum is paid out to the insured person’s estate or a nominated benefactor/s.

There is no pay-out at the end of the policy term, if the insured has not died – just as with any other form of insurance, such as car or home insurance, where a claim is not made during the policy term.

How long is the insurance term?

Life insurance can be purchased to cover different terms; factors such as the age of children or length of time to retirement would be taken into account.

Generally a minimum term is calculated to the age a youngest child will reach independence, if the policy is for family protection.  Those with no children, looking to financially secure a remaining spouse, would normally buy a policy up to age 65, with an option to convert to longer-term cover after that.

I have Mortgage Protection; is this not life cover?

Mortgage protection is the most basic form of life assurance and the cheapest.  It generally decreases each year in line with the mortgage balance outstanding.

Remember, however, that this cover is intended to pay-off the mortgage amount owing to the financial institution.  While this may secure a home, it does not provide a cash income to the family.

Is it possible to have life insurance for life?

Yes, whole-of-life cover is a guaranteed life assurance policy which pays out a lump sum in the event of death.  There is no fixed term attached to this type of policy; it is cover for the person’s entire life and is therefore usually more expensive than other forms of life assurance.

How much does life insurance cost?

How much you pay varies, depending on the insurance provider, but the main factors that dictate the price include the sum assured for, the length of term of the policy, the type of insurance policy, your age, your health, especially any existing medical conditions, and whether or not you smoke.  Policies can cost anything from €15 a month depending on these various factors. As an example a non-smoking couple in their mid-30’s can take out €250,000 over 10 years for circa €30 per month.

How much will a policy pay out?

Each individual determines how much their life is insured for, the amount usually recommend within the life assurance industry being in the region of ten to fifteen times net salary.  This figure, therefore, is a key factor in determining the cost of the policy.

What if I get ill and cannot provide for my family?

Specified Illness cover can be taken out as a standalone plan, or as part of a life insurance policy.  It pays out a lump sum if you are diagnosed with a condition specifically listed in your policy.  This type of policy tends to be more expensive than life assurance, as you are five times more likely to claim throughout the policy term than you are to claim on a death policy.

Can couples get life cover together?

Joint life policies and dual life policies are sold, but note the difference in benefits received by claimants on the two types.  A joint life policy offers only one pay-out in the event of a death to the surviving claimant.  However, a dual life policy will provide separate pay-outs to the estate on the death of each claimant.

Reference: www.independent.ie

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End of Year Awards 2017

 

Congratulations to the winners of our staff awards on Friday night, Jennifer Fitzgerald (Administrator of the Year), Marcin Czekalski (General Insurance Advisor of the Year), Louise O’Brien (Manager of the Year) and John McEntee (Assistant Financial Advisor of the Year).

These awards are given to those who have excelled in their fields over the last twelve months and have gone above and beyond to support their colleagues and clients.

Well done to all!

 

Also, voted Colleague of the Year by her peers was Brid Holligan. Congratulations!

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Why everyone needs expert financial advice

 

We don’t perform surgery on ourselves or extract our own teeth, they say only fools represent themselves in court and yet we make some of the most important and expensive financial decisions of our lives, without ever consulting a financial expert.

Big mistake.

We’ve learned to our cost in Ireland, that overloading on property-based debt can produce not just disastrous outcomes for individuals, but an entire nation.

Even everyday things like buying the appropriate home insurance have led to serious financial hardship for thousands across the country, simply because people don’t always know what they’re buying.

In this case, the unfortunate homeowners will deeply regret not just the flood damage, but not taking informed advice.

Financial advice should be personal

Expert advice is centred on ensuring you get what’s best for you. A financial advisor can help you connect the dots between a good plan and the right products – all with an impartiality that’s impossible to achieve on your own.

And, if your personal circumstances or the markets hit a wobble, they can provide the calming rationale you might need to turn things back around.

If we’re lucky, our first lessons in the art of money management start in childhood.

We’re given a piggy bank for pocket money and in time, it’s transferred into a child-friendly savings account in the post office, credit union or local bank and the life-long ritual of saving begins.

By the time we start earning our own living, we’ve hopefully managed to open a current account or arrange a small personal loan, without making too many mistakes.

Yet, under time pressure and most likely transacting online, how many of us shop around for the best terms and conditions when it comes to financial products?

It’s fair to say, the average young working adult will now spend more time researching their next smart phone than their first pension, despite the fact our financial lives are becoming more complex.
That’s something we really need to redress.

Financial decisions deserve our time and attention

A cavalier approach has no place when it comes to 30-year mortgages, insurance that protects the people and possessions we value most, and pensions that determine how we will spend the last quarter of our lives.

How many people fully understand the asset allocation that sits behind their pension, how tax relief works or even how to claim their retirement income come the time?

Very few is my guess, but here’s the thing…that’s okay, provided you get the advice you need.

Be planned and be practical

The earlier you strike up a relationship with a good independent advisor, the better.

That might be when you join an occupational pension plan, start investing, get married or buy your first home. And of course, starting a family will take you into a whole new world of financial challenges.

Good financial advice can help with all of that.

At its most basic, the role of an investment advisor is to create a realistic plan that will help you reach your financial goals. They can help get you there too, with practical advice on how to increase your income, budget better, invest wisely and sense check your spending priorities.

One of the greatest dangers of taking a DIY approach is that you never get an objective view of your financial position that includes all the bells and whistles, like income, tax, spending, saving, debt, assets and liabilities.

There’s no synergy between piecemeal actions and as a result, you end up reacting to events rather than planning for them. That means you’re also more vulnerable to short-term crises and run the risk of getting sucked in by headlines and hype.

With a neutral, informed voice at the other end of the conversation, you’ll be reminded there’s a tailored plan in place, allowing you to remain focused, resist the temptation to take unnecessary risks and make better financial decisions generally.
Now, what part of that doesn’t make sense?

Reference: www.irishlife.ie, Jill Kerby, Personal Finance Journalist.