1 in 3 families are not financially protected. Is yours?
The reality of the world we live in is that we are all aware of people, of all ages, who have been struck down by serious illness or have died prematurely. The purpose of this blog is to encourage you to make an informed decision as to whether you can afford not to have financial protection in place.
According to research commissioned recently by Irish Life an incredible 1 in 3 families have no financial protection in place. Therefore, a huge percentage have either made a conscious decision that they don’t need financial protection, and this might be the case for a small minority, or they are unaware of the very real impact that death or serious illness would have on their family’s financial wellbeing.
Living Costs Money
The lives we live; the holidays, gifts, schools, social life, saving for the future and indeed day to day necessities all require financial resources. During your working life, this is more than likely going come from the income of you and/or your partner. Your income is your financial heartbeat and for those raising families in particular this is a very expensive time. What if this income source stopped due to serious illness or death? Where would the replacement income come from? Would you be able to afford the lifestyle that you and your family currently have? Unlikely. The state may be able to provide some assistance and you may have built up some savings over the years but in all probability there will be a very real impact on the lifestyle you can afford.
The Unfortunate Reality
Irish Life’s claims statistics for 2016 bring home the point quite starkly. In 2016 they paid out €171 million in life insurance, specified illness and terminal illness claims. They estimate that over 2,600 families had to deal with the life changing events brought about by these claims.
Life Insurance (Pays out on death)
- For both men and women cancer and heart related conditions were the top two reasons for claims.
- Cancer accounted for just over half of all female claims and just under 40% for males
- 33% of all claims were for people in the 18 to 60 age group
Specified Illness (Pays out on diagnosis of a specified illness)
- Heart related conditions accounted for over 5 times as many males specified illness claims as female
- Malignant cancer accounted for 3 out of every 4 female specified illness claims.
- Just over 75% of claims were for people in the 18-60 age bracket
Income Protection (Pays a replacement income if you can’t work due to illness or injury)
Friends First, one of the biggest providers of this cover in the Irish market, paid out €33 million to nearly 1,500 people in 2016
- 46% of their claimants were under 50 years
- Women were on average 45 years old when they need to claim, men were 50
- 52% of claims were for Orthopaedic or Psychological reasons
- €1,840 was the average amount paid out each month and 4 years was the average claim duration – a long time to be without income if you don’t have cover
The message behind these claims stats is that people do become ill and die prematurely. If protection benefits are in place they will at least alleviate some or all of the financial loss that may occur. If you do not have protection benefits in place, or indeed have not reviewed the suitability of your cover for a number of years, then you are leaving yourself and your family financially exposed.
Make An Informed Decision
As a starting point, you should try to quantify the financial impact on you and your family’s lifestyle should one of these tragic events occur. Yes, there is a cost for protecting against this financial loss but it may not be as much as you think. In addition, in some cases this can be reduced through tax relief at your marginal rate of income tax.