What us enoughers have to say – we know two things for certain.
1 If you are reading this article you’re not dead.
2. You will die someday.
If you have loads of life cover read what Lisa has to say below you might learn something, if you don’t have any, read what Lisa has to say below you might understand how important it is and how cheap it is.
Over half a million families in Ireland do not have life cover according to Irish Life, one of Ireland’s largest life assurance companies.
Irish Life commissioned Red C and Coyne Research to carry out nationally representative surveys in 2016 which found that 2 in 5 adults have no life protection, with 1 in 3 parents with no cover whatsoever. This is an alarming statistic.
Why are so many people reluctant to organise life cover for themselves and their families?
I think there are many reasons not least the following;
- We don’t like to think of life cover and the fact that ultimately it is on our death, that life cover is paid. Like making a Will, it is easier to put it on the long finger, as none of us want to think about not being around for a family. It is too frightening a thought. It is ‘easier’ to push it neatly to back of our minds.
- We don’t totally understand the need for life cover. When we take out a mortgage for a family home, we have to take out at the minimum, mortgage life insurance. As it is mandatory, it is an easier concept and after all none of us believe we’ll ever need it.
- There is a perception it is too expensive. Life cover is not expensive, particularly not in your younger years, when you are starting a family and arguably need it most. For example, as of February 2017, a life cover plan for a female, non smoker, aged 32 years for the sum assured of €250,000 over a term of 10 years (including a convertible option) would be €14.82 monthly.
To be honest, I would personally be of the opinion that not affording it is not an option. The alternative does not bear thinking about. Any spouse/partner left behind with a young family has enough horror to deal with without the stress of financial instability. Even a small amount of cover will elevate the stress and strain for the initial year or so.
- We don’t see the need if we have basic life cover in place. If we have Mortgage Protection we think we are covered.
Far from it, for example if we have a dependent family, while the mortgage will be paid off, assuming we have only mortgage protection cover, there is no surplus. Leaving aside the shock of funeral expenses, which can wipe any emergency fund/savings we might have, one can only imagine the stress financial pressures would put on the surviving partner, at a time when they are grief stricken. At least by providing a lump sum in death, it elevates the financial stress at a time when it is needed most.
- We don’t look at our earning power in the same way as our assets. After all, we insure our car and our house and would not dream of not doing so. But what if we weren’t around to provide a salary for our family? Is it not more important to protect ourselves than our assets?
If we just think for a minute about the future and the amount we can earn in the next say 20 years for example we would probably by surprised. Let’s take an average wage of €35,000; over 20 years that will amount to €700,000. A lot of money – but money that invariably will be required for living expenses over the next 20 years, particularly if you have young children (and expensive child care costs give way to expensive education costs!). So while we hate to think about it, we have to ask ourselves the question; how would our young family live if we weren’t around to earn that €700,000?
- We don’t realise we should have life cover, for example if we are co-habiting, it is a must but few realise this. As a co-habiting couple as opposed to a non married couple, you are treated as a stranger for taxation purposes. The stranger threshold for Inheritance Tax is €16,250 (as at October 2016). Inheritances in excess of this are subject to tax at 33%. So if the house passes to the cohabiting partner, he/she could have a substantial tax bill.
Thankfully most of the time, it is not needed but it is peace of mind to have it in place, knowing our loved ones are protected, should the unexpected happen.
This is an opinion only and does not constitute advice as individual circumstances will determine all financial advise given.
So what are you waiting for? Get on the phone now to your existing advisor and review your life cover or find out how much you should have. Don’t have an advisor? Contact Lisa or head to our contributor’s page and pick one.