Ronan’s Monthly Review
Serious illness – why you should have it , and what does it cover.
This type of protection cover has been in the Irish market for more than 20 years now and the changes in the contracts being provided by Life assurance companies have changed drastically over this period. Initially the cover on offer could be said to be restricted to a low number of serious illnesses with very restricted defined definitions of the illnesses covered.
Whilst each claim will only be paid based on the definition of the listed illness in each customers policy document. The number of illnesses covered,additional fridge benefits and indeed the additions of partial payments, has now meant that the current policies provide far more cover. In real terms the cost of this cover has been maintain at realistic levels for families and corporate clients alike. We often say to our clients ‘for the price of a daily coffee, we can provide excellent cover’. If clients must make a claim and the illness is covered under the terms of the contract, a lump sum tax free payment is paid. In real terms this cover helps each customer manage the financial implications of contacting a serious illness. The burden of the expenses associated with treatment, travel, child care, leave of absent, can be relieved. This hopefully allows the patience and family to concentrate on what really matters – recovery. Remember, if you have an old policy with this type of cover in place, the new illnesses and benefits are not automatically included. Please do contact us if you’re willing to give up your lunch time coffee each day and have the peace of mind of having this base covered as best as possible for you and your family.
Inheritance tax and contracts held in trust – ‘A Whole lot of choice’
Traditionally these contracts were taken out by people for inheritance tax where the value of their estate would have tax implications for their next of kin. The contracts were put in place on a ‘Whole of life bases ‘and would be paid on second death if the policy needed to be in joint names I.e. Husband and wife. Fairly straight forward, once the contracts is written as per section 72 and approved by revenue.
Families needing to establish ‘special needs trusts’ also find themselves in a similar situation as there may be a need to provide financial protection for a dependant with special needs. The trust is established to ring fence the payment of the life assurance policy and is set up in manner which will not affect any state provisions being paid to the dependant. A trustee is appointed to manage payments when needed. These could be in terms of providing additional housing requirements, education or medical expenses. We recently conducted a seminar for families in such a position and highlighted the fact that there is a “whole lot of choice “in this market compared to the old traditional contracts. The concept now is that you can have a contract that will adhere to the requirements as indicated above but will also have two options that may suit your personal situation in the future.
What are these new features
1. The option to protect the cover after 15 years and pay no more premiums
2. The option the cash out after 15 years and get 70% of the premiums paid returned tax free.
If you have an old whole of life contract you will not have these options. Premiums are again competitive and should be assessed. Please do email us for a quote and we would be delighted to arrange a meeting to discuss your options.
Next time let’s look at the markets, Trade war implications and Brexit again!!!!