Personal Finance
Life Cover
What would happen to your family if you never made it home from work today?
With life insurance, you can make sure your family is protected even if the worst happens to you. It makes sense to take precautions against the financial impact of your untimely death.
Due to Covid-19 global pandemic we've all had time to reflect on what's important in our lives and protecting our families and loved ones has emerged as a key priority.
Benefits
What can I expect from Fahey Financial Solutions?
We at Fahey Financial Solutions will help to assess your need for life insurance cover.
This will depend on your age, family circumstances and lifestyle. Typically you will want your mortgage and any outstanding loans cleared. You may wish to provide a fund to cover funeral expenses and/or afford your surviving spouse/partner to take some time off work in the event of your untimely death. You will also want to ensure that your children and their education/development requirements are catered for if you died prematurely.
Assessing your exact needs
Fahey Financial Solutions will assess what cover you have in place through mortgage protection, pension schemes, other polices and social welfare benefits. If there is a deficit in cover, we can advise on the best way of bridging this gap through reducing or level term or wheter there is a requirement for whole of life cover. We will also compare policy benefits and premiums from across a range of different life insurance companies and recommend the most appropriate for your individual circumstances.
Things to watch out for
- Is the policy convertible? Convertible gives you the right to take cover again without evidence of health. It is useful if your health was to deteriorate and you couldn’t get cover at the end of the term.
- Does the policy need to be placed in trust? This is to ensure benefits go to the right people in event of your untimely death.
Income Protection
Income Protection - accident or illness. Can’t work. Don’t worry.
Income protection provides cover for your income if you become unable to work and pays a taxable income benefit if this happens.
The key question with this cover is when should the benefit start paying out? The “deferred period” can be set at 4, 8, 13, 26 or 52 weeks. This means you must be off work longer than the deferred period before the income protection benefit kicks in. After that time you are covered for whatever period you are unable to work up to retirement should your illness or disability last that long.
If your existing employment provides you with some short term benefit, or if you have significant financial resources in place you could opt for a longer deferral period which would reduce the cost of such cover.
Some occupations will not be eligible for this cover given the level of risk associated with certain occupations while others will attract higher premiums. You should discuss the nature of your job particularly any risk factors associated with it, with Fahey Financial Solutions so we can give you a clear idea of the cost and availability of cover.
Benefits
Tax Relief
Income protection pays a taxable income benefit if you are unable to work as a result of an accident, illness or injury. The premiums on this plan qualify for tax relief at your marginal rate.
Reduce the cost of the cover
If your job covers your income for long periods, or if you have significant financial resources to support you, you could take a longer deferred period, which would reduce the cost of the cover. Alternatively, you might seek a shorter deferred period, which is available for certain occupations.
Clear idea of the Cost and Availability of Cover
Some occupations will not be eligible for cover while others will attract higher premiums. You can discuss the nature of your job with Fahey Financial Solutions, particularly any risk factors associated with it, so we can give you a clear idea of the cost and availability of cover.
Even More Benefits
Find the right cover for your needs.
You can protect up to 75% of your income, less any entitlements to social welfare. Self-employed people and propriety company directors don’t have social welfare entitlements for disability so this cover is essential for them. Fahey Financial Solutions will be able to advise you on the appropriate level of cover, taking into account your income needs, your benefit entitlements, and the cost and availability of cover.
Combined Serious Illness Cover
You may wish to take a combination of serious illness cover and income protection to cover lump sum and income needs. Fahey Financial Solutions can advise on the best mix for you.
Making the process easy
Applying for cover starts with completion of a medical proposal form. The life insurance company may write to your GP for a report, and in some cases a medical examination is required. Once you are accepted by the life company, cover is permanent for the term of the policy regardless of what happens to your health.
Things to watch out for
- Cover may be arranged on an “own occupation” (you are unable to perform your usual job) or “any occupation” (you are unable to perform any job) basis.
- You may be required to notify and be assessed for changes in your occupation over your career.
Serious Illness
Serious illness cover pays a tax-free lump sum in the event you are diagnosed with a number of specified serious illnesses.
There are a large range of serious illnesses covered on a typical policy. The chances of a healthy male aged 20-40 suffering a heart attack or stroke before the age of 65 are 1 in 4, and the chances of a healthy female aged 20-40 suffering from cancer, heart attack or stroke before the age of 65 is one in five. Given these statistics, it is worth your while protecting yourself financially if you were diagnosed with any such illness.
How much cover do you need?
With a serious illness it can be difficult to assess the potential impact. How long will you be off work? Will there be any major medical expenses not covered by your medical insurance? Will you need to travel for specialised treatment? Will there be a permanent impact on your earnings?
Finding the right cover for you
You can discuss all of these factors with Fahey Financial Solutions who will help you choose the most appropriate type and level of cover for you. Typically you will want serious illness cover equal to or greater than your outstanding loans, plus a multiple of annual net earnings.
The process made easy
Applying for cover starts with completion of a medical proposal form. The life insurance company may write to your GP for a report, and in some cases a medical examination is required. Once you are accepted by the life company, cover is permanent for the term of the policy regardless of what happens to your health.
Things to watch out for
- As you are more likely to be diagnosed with a serious illness than die prematurely serious illness cover is more expensive than life insurance so it’s important to get Fahey Financial Solutions to shop around on your behalf.
- Your cover can be arranged in conjunction with life insurance. It can be set up on an “independent” basis, whereby the serious illness benefit is paid and doesn’t affect the life insurance. Alternatively, it can be arranged on an “accelerated” basis which means the serious illness cover pay-out will reduce the life insurance benefit by this amount.
Pensions
The trouble with retirement is that you never get a day off.
Pensions are an extremely tax efficient way of saving. You get tax relief on your saving at the marginal rate; funds accumulate tax free until retirement and you get a percentage of your accumulated fund tax-free at retirement.
Saving for retirement
You can save personally, either through a personal pension, PRSA or AVC (free standing). Or you can save through a company, with an executive pension, company scheme or AVC (via scheme). Fahey Financial Solutions can advise you on the best options for your particular circumstances.
Pension Transfers
Changing careers, redundancies and pension scheme windups can imply your benefit in a pension scheme is restructured and it’s possible that a fund is transferred out of the scheme and set up independently on your behalf. This complex area has potential for considerable loss to you as you are swapping one benefit for another. Fahey Financial Solutions will be able to talk you through the issues involved and you can appoint us to deal with the scheme trustees on your behalf.
Post Retirement Options
Having spent years saving your retirement fund, it’s worth spending some time with Fahey Financial Solutions discussing the best way of funding your retirement. For some, that may be the traditional annuity route i.e. income for life. Others may wish to explore post retirement investment through Approved Retirement Funds (ARFs). Either way, we at Fahey Financial Solutions are expertly qualified to talk you through the various options and choices and we can recommend the most appropriate course of action for you.
Things to watch out for
- A company funded pension is usually more beneficial especially if it’s your own company.
- Be extra careful with defined benefit options under pension scheme transfers.
- ARF’s have longevity and investment risk, which Fahey Financial Solutions will explain.
Mortgage Protection
Be prepared for anything by expecting the unexpected
In most cases, mortgage protection is a legal requirement on your family home. Even if there are exceptions to this legal requirement, the lender will typically insist on the cover. Fahey Financial Solutions can get you the best quality cover at the most competitive cost.
Remember, you are not obliged to deal with the bank who gives you the loan and it is prudent to arrange this cover independently on your mortgage provider.
At its most basic, mortgage protection is life insurance that parallels the outstanding mortgage. The cover diminishes alongside the loan (taking assumptions about maximum interest rates on the mortgage over the term).
Benefits
Add to your Mortgage Protection
You can also get cover with options to increase the term and life insurance should you move home. This can prove extremely beneficial if your health deteriorated at some future date and you were unable to trade up as a result of not being able to increase your cover. Talk to us at Fahey Financial Solutions where we can assess and recommend the most suitable type of cover that matches your particular requirements.
Making the process easy
Applying for cover starts with completion of a medical proposal form. The life insurance company may write to your GP for a report, and in some cases a medical examination is required. Once you are accepted by the life company, cover is permanent for the term of the policy regardless of what happens to your health. We at Fahey Financial Solutions will assist you with the form filling and ensure your policy is set up correctly.
Protecting you and your family
If you or your spouse die, the loan is cleared. If you are young, you should consider convertible term; this cover stays the same over the mortgage term and you can extend the cover at the end without health evidence.
Things to watch out for
- You may have taken out a mortgage on an investment property and not arranged any mortgage protection. In the event of your untimely death before mortage is cleared the beneficiaries of your estate may have to sell the property to pay back the loan.
- When you arranged your mortgage your bank would more than likely have provided you with a quotation from only one life company at the time. Allow us check if your mortgage protection premium is still competitive.