On the Money: The improbable is more likely than you think
It is human nature to want to imagine that none of the bad stuff we read or hear about will ever happen to us.
Many of us in our past have put off writing a will, or dealing with anything that involves facing the possibility that the future won’t go as smoothly as we would like it to.
However, it does not have to be as bleak as it sounds. Being financially prepared for misfortune is something to have pride in, it means you can keep your independence should you get ill, and that you are taking care of your loved ones. Serious illness payouts can assist in the recovery process, giving you time to heal and allowing you to concentrate on recovering without the stress of financial worries. It is always pertinent to expect the unexpected.
Take the unexpected event of Covid for example, during 2020, Covid related Life Policy claims accounted for 4% of the claims paid by Irish Life. Covid not only affected those who contracted it, it also indirectly affected thousands of others in unforeseen ways such as in the area of mental health.
In 2020, 25% of all Aviva Income Protection claims were for psychological reasons, with 56% of claimants being under 50 at the time their claim was made. Millions of Euro are paid each week to those overcome by the sudden and often adverse financial consequences of a serious illness, the medical inability to work or a death. Both Irish Life and New Ireland found that 60% of claims were for males with the lesser percentage of 40% of claims being for women.
Life companies also regularly see unexpected claims where the plan was only in place a short period of time before it was required to make a claim.
The main claims for Life Companies such as Aviva, Irish Life and New Ireland were for Heart issues, Cancer (Breast Cancer made up 50% of all life and serious illness claims for Aviva in 2020 for women), Respitory issues, MS and stroke.
Irish Life’s statistics for 2020 said that 63% of all claim cases were for individuals aged between 40 and 60.
There are a few types of protection, and it would surprise people how affordable it can be to put an adequate policy in place.
When considering a protection policy, it is important to remember to take into account every expense to ensure that you have enough cover.
A financial review with a qualified advisor can assist you with this. New Ireland, for example, had 14 serious illness claim in both Leitrim and Cavan in 2019.
Their statistics show that individuals in Leitrim were well covered with total serious illness claims of €1,319,054 (an average of €94,218 per claim), whilst our neighbours in Cavan, with a larger population, had total claims of only €390,757 (an average of €37,912 per claim) for the same number of claims.
This goes to show the discrepancy between what people believe they need to live on should they become sick, and also highlights the fact that each person’s situation is different.
It is important not only to have cover in place but also to have the correct type and level of cover so that you find the right cover to fit your life. As life-changing as it is to get bad news about your health, proper protection can make the process less traumatic when it does happen.
The main types of protection are; Specified Serious Illness cover which provides a lump sum if you get sick with a specific illness, Life Cover which provides a lump sum to your estate on your death, and Income Protection which provides you with a replacement income should you be unable to work.
For each of these protection products, you can choose the level of cover you need. Remember that there is never a cheaper day to buy protection cover than today as policy prices usually increase with age.