Types of Life Assurance
There are many types of life assurance which help protect your income and your family from unfortunate events that hit families and individuals throughout their lifetimes. There is level term cover, convertible term life assurance and whole of life cover which lasts for ever until you die. It is very important to know which product suits your needs and it. Therefore when seeking life assurance please ensure you take professional advice and sit down with a qualified insurance professional to explain the benefits whilst the cost should be secondary but is important.
How to create wealth from Life Assurance?
Life Assurance has to be part of everyone's financial portfolio be it a family or a business as it offers invaluable wealth protection in the event of premature death. One of the best description's I have ever heard of life cover payout in the event of death is from an American insurance professional who stated that life assurance is like an "explosion of money" to a family in the event of tragic circumstances. However I also feel that that life assurance can be a creator of wealth as certain life plans can help protect wealth and help build legacies for children. For example if you had liquid assets of €200,000 in deposits at 65 years of age and wish to leave your children a legacy but spend your money in retirement, we can show you a way on how you can build a legacy build via life assurance to kick in on your death.
Is Life Cover that important?
It is one of the most important financial products that you can ever arrange during your lifetime. It protects your income, your spouse's income and your continuing family finances including paying short term debt, pay school fees and pay for college fees.
Have a look of the following example:
- If you had a 33 year old family man who is earning €100,000 per annum gross and they spend 1% of their salary per annum (approx €1,000 pa) covering €1,000,000 this would only cost 1% of gross salary yet protects net salary for over 12-15 years. Very cost effective.
Non Smokers do better?
Yes the reduction in premiums could be as much as 40% if you have given up smoking, therefore there could a substantial discount on your life assurance and mortgage protection which can be checked very easily. Also if you use an electric cigarette you can secure non smoker rates with one life assurance company.
Is there a policy that lasts forever?
Yes, most life assurance plans work off a term which is usually 20 years plus, however you can look towards a plan known as whole of life cover which will last until you die and is guaranteed to pay out in the future. Also 2 Life Companies now offer terms of 50 years for life cover so it can be very affordable for young couples to have this type of cover.
How much should you Insure your life for?
This is a very important as it relates to the amount you need per year and how much net money you require per month to ensure that your family is well looked after in the event of death of the main income earner or suffering a major serious illness. What you look at is the net income you have after tax per month and ensure this amount is protected right up to your youngest child exits college, usually about 23 years of age.
Have a look at the following example:
- Net income - €4,000 pm
- Mortgage - €1,000 pm
- Youngest child 3
- Recommended life cover solution for above - €4,000 income
- Mortgage protection would cover mortgage - €1,000 pm debt cleared
- Widows pension on death of main earner - €1200 pm
- Balance - €1,800 pm at risk income
- At risk period (from youngest child age) - 20 years
Potential life cover amount (20 x €1800 x12) - €432,000 life cover required (This ignores paying off short debt, etc)