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Financial-Planning-and-Mortgages

Financial-Planning-and-Mortgages
 
            

Financial Planning & Mortgages

 
 

Life Assurance

The insurance cover popularly known as "Life Assurance" is surely a misnomer. The more accurate description of this type of protection would be "Premature Death Cover". It is simply the protection of income or assets for the next of kin in the event of premature death.

On a domestic or family level, here are some simple disturbing facts:
-  Over 50% of Irish adults do not have any "life" cover
-  19 out of 20 families in Ireland have insufficient life cover

This means that in many cases the surviving families are left to depend on State benefits, which at their best are only at subsistence level. So there is need to provide for:
-  Replacement /Continuation of income in the event of premature death
-  Cash to settle outstanding debts
-  Money to meet future financial needs such as education of children, repair and maintenance of the family home etc.

On a business level, the use of "life" assurance can be of valuable use also. In the event of premature death of a key person or director, Life cover can be used to provide immediate cash for:
-  Share Buy Outs to retain control and ownership
-  Protection of deceased¹s family exchanging inherited business interest for cash from the "life" policy
-  A vital safety net for both the business and the family
-  So multiple benefits to both the business and family can be arranged under the one plan
-  Recruitment of replacement

Just like making a will, the arranging of "Life" cover does not precipitate death! However, it does provide peace of mind that should the worst happen, at least there is a financial safety net there for the surviving family/business partners. The good news is that unlike most other forms of insurance, the cost of "Life" cover is actually cheaper today than ever (especially for non-smokers).

Mortgage Projection

This is a form of term insurance that is designed to pay off the outstanding amount of your mortgage should you or your partner die during the term of the loan and will be required by your bank as a condition of the mortgage loan. The amount of cover reduces each year, in line with your mortgage as you pay it off, assuming interest rates do not go over a defined level, typically 8 - 9% per annum and your repayments are kept up to date. The monthly or annual premium is fixed through the term of the policy. Mortgage protection is cheaper than standard term assurance because the level of life cover reduces over the term of the policy.

Serious Illness

This protection policy pays out a Tax-Free lump sum on the diagnosis of a specified illness covered by the policy. This is an increasingly popular feature of some life assurance policies and is also available as a stand-alone policy. Almost everybody needs some amount of serious illness cover, although as with life cover it depends on your personal circumstances and the stage you are at in life.
Most people only insure their lives, so their families will only get a payout when they die. But you are much more likely to become seriously ill or disabled while your family are still dependent. Single people should consider serious illness over life assurance. This insurance is expensive, for the simple reason that you are far more likely to claim on it than you are on a life policy that pays out on death. It is different to cover, such as VHI, in that it is aimed at serious conditions that may have a major effect on you and your families.
 
 

 
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