FDC: Do you know how much life cover you really have now?

By Tom Barry

THE death of a breadwinner in a family is financially catastrophic and at the age most people start families, the price of insuring against it is very small. 

Taking out Life Assurance should be a no-brainer, but we all know many people who don’t. 

The key need met by family life protection is the replacement of the income of the heads of the household in the event of premature death. 

People know that they need life assurance but they just can’t seem to get around to sorting it out. It also seems that another reason for the gap in personal protection is that individuals believe they are already covered adequately, and therefore do not require any further protection. In reality, that couldn’t be any further from the truth. 

Many of us do not know how much cover we really have or exactly what is covered in our existing policies, let alone look to challenge whether the level of cover amounts to enough. This is especially the case for families who are financially dependent (full or in part) on a parent.

Of course, what constitutes ‘enough’ is highly subjective. However, the reality that many people are falling short of receiving adequate financial support during these unforeseen times should encourage all of us to at least review our current protection plans and check that we have enough cover in place to ensure our longer-term financial well-being. Could your family cope with a sudden loss of income in the event of illness or death? 

The realisation that many of us couldn’t is why we protect our family’s financial future with life insurance. 

But new research suggests that too few of us are doing it, leaving us just months away from not being able to pay the bills. 

When it comes to protecting ourselves and our loved ones financially, Ireland is under-covered.

One in two adults in Ireland don’t have life cover at all. That means 360,000 families are without cover and almost half a million children in Ireland have parents with no life cover. 

Two-in-five claim their household would struggle financially should their income be lost through death, illness or injury. Working adults say they could only survive for six months on average in the event of a death, an illness or injury. 

One in every two people put the issue of family protection on the long finger as they have just not thought about life insurance, or have not got around to it, or they don’t think they need cover. 

Of course, no one likes to think about death and illness, even though everyone knows someone who has had a serious illness or death in their family. 

Ironically, by taking out a policy that protects your family in the event of death or serious illness, you are giving yourself peace of mind in the here and now.

Less than half of women in Ireland have some form of financial protection, compared with two thirds of men. 

The figures hold, not just for life assurance, but for specified illness cover (which protects you in the event of a specified illness such as cancer, heart attack or stroke) and income protection (which protects you in the event of any illness that keeps you from work). 

It’s worrying to see such a stark lack of financial protection for women in Ireland. It’s important that women take time to assess their own financial protection needs and what they can do to protect themselves and their family against any unexpected events. 

Very often this is forgotten about or even delayed due to the hustle and bustle of everyday life. We need to make women in Ireland more aware of the real benefits of life and specified illness cover, as it can be a lifeline for them and their families in times of difficulty.

Many of us hold mortgage protection only, paying off a mortgage in the event of death. So basically, you are insuring the bank, or at least, the bricks and mortar. You are not protecting your family.

One of the biggest savings a household with a home loan can make is to switch to a better-value mortgage protection policy. Yet few people, if any, move provider.

In an ideal world, everyone would have ticked all the relevant financial boxes at each stage of their life cycle. 

However, at FDC Financial Services, we recognise that this is not always the case! The good news is that it’s never too late to take control.

• Tom Barry QFA RPA SIA FLIA is a financial consultant with FDC. FDC Financial Services Ltd is regulated by The Central Bank of Ireland.