Understanding the different types of Protection Policies

Choosing a protection policy can be confusing. From mortgage protection to serious illness cover, knowing your options is key.?

Mortgage protection is like a safety net for homeowners in Ireland. If you pass away while still paying your mortgage, this insurance clears the remaining balance. This means your family won't have to worry about paying off the mortgage balance if something unexpected happens to you. It's a way to ensure that they can stay in their home without financial stress. Getting mortgage protection isn't just for your own benefit—it's also about making sure your family is protected if something happens to you. It's a smart move to keep your family's home safe and secure, even if life takes a difficult turn.?

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Serious Illness cover is a valuable addition to your financial plan. If you're diagnosed with a serious illness that is covered within the conditions your policy, it pays out a lump sum. This lump sum can be a significant financial relief during challenging times, helping cover medical expenses, mortgage payments, or other bills. It offers peace of mind, knowing you have financial support when you need it most. With Serious Illness cover, you and your family can focus on recovery without worrying about the financial strain.?

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Term Assurance? is an easy and affordable way to help your family financially. You choose the length the policy remains active for, for example until your mortgage is paid off or when your kids reach a certain age. You pay a set amount each month, which makes it easy to budget.?

If you die during the policy term, the life company gives your family a lump sum of money. They can use this money to pay bills, like the mortgage or everyday expenses. It gives you peace of mind, knowing your family will have support even if you're not there.?

Term Assurance is important for financial planning, especially if you have people who rely on you. It ensures your family is looked after financially when they need it most, giving them stability and security.?

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Whole of life insurance covers you for your whole life, so your family gets a payment when you die. It's different from term insurance because the term is indefinite until you pass away or cancel your payments. This insurance gives your family financial security in the future. The money they get can pay for things like funerals, debts, or help them out financially for everyday needs. Even though whole of life insurance costs more than term insurance, the amount you pay stays the same for your whole life. So, you don't have to worry about it getting more expensive as you get older or if you get sick. Having whole of life insurance is a smart way to plan for the future and make sure your family is taken care of when you're not around anymore.?

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However keeping your income safe is really important for your finances, especially if something unexpected happens, like getting sick or injured. This is where income protection comes in.?

Income Protection replaces a portion of your income if you're unable to work due to illness or injury. It provides a monthly payment to help cover living expenses, ensuring financial stability during periods of incapacity.??

Example of income protection:?

If your gross salary is €45,000, you can cover 75% of it, which is €33,750. Subtract the state illness benefit of around €12,064. You'll be left with €21,686 or €1,807 monthly cover from your insurer if you're unable to work due to illness or injury. If you're self-employed, you won't receive state illness benefit*, so you can cover the full 75% yourself.?

There is also a huge benefit to having Income Protection and that is Tax Relief. If you pay income tax, you can get full tax relief on all the premiums you pay for income protection. This means you can reduce your tax bill by the same amount you pay for the premiums, up to 10% of your total income in Ireland. Just remember, it's up to you to claim this tax relief. And if your tax or job situation changes, it could affect your eligibility for this relief.?

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Different factors can influence the price of your income protection premium:?

Your Income: Higher pay means higher premiums because it's designed to cover your earnings.?

Coverage Amount: You can choose to cover up to 75% of your income, minus state benefits. Deciding how much to cover affects your premium.?

Occupation Different jobs have different risks, which affect your premium:?

High-risk Occupation (Construction Worker):?

• Construction workers typically engage in physically demanding tasks at elevated heights or in hazardous environments.?
• They face higher risks of workplace accidents, injuries, or long-term health issues due to exposure to dangerous equipment, materials, and conditions.?
• As a result, insurance premiums for income protection may be higher for construction workers due to the increased likelihood of making a claim.?

Low-risk Occupation (Office Worker):?

• Office workers typically perform sedentary tasks in a controlled and safe environment.?
• They have minimal exposure to physical hazards or workplace accidents compared to construction workers.?
• Office workers are less likely to experience work-related injuries or health issues, leading to lower insurance premiums for income protection.?

Deferral Period: How long you wait before getting paid affects your premium. Longer waits mean lower costs, but shorter ones mean higher costs.?

Retirement Age: How long you need the policy affects your premium. Closer retirement means higher premiums.?

Smoking: Smoking or using nicotine products raises premiums by 50% if you've used them in the last year.?

Health and Age: Your medical history and age impact your premium. Healthier and younger people pay lower premiums.?

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Deciding which protection plan is best for you, depends on your individual situation, what you want to achieve, and how much help you need. Each plan has its own benefits to keep your income and finances safe.? Talking to an expert can help you figure out which plan is right for you.?

Protection policies are subject to the disclosure of material facts and medical underwriting of the applicant which will determine the level of cover available to the applicable (where applicable) and the cost of that cover.???

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*Some self-employed people may qualify for state illness benefit??