By Dave Kavanagh
During a consultation with new clients recently, I asked if they had serious illness cover in place. They said that they did. When I asked for the details, they were unsure so searched for their policy details. It turned out that they had PPI (Payment Protection Insurance) and misinterpreted the word “illness” somewhere in the description. They did not have serious illness cover. (The PPI “might” have paid out a few hundred euro towards their mortgage payment if the person covered was out of work due to illness or injury and only after a 2 month period and then stopped after 12 months, whereas serious illness cover can pay out a tax free lump sum on diagnosis of one of the conditions covered). It was yet another reminder that most people do not know the important details of plans that they pay regularly for. As people’s circumstances change, it’s important to be up to date with knowing what you are actually paying for. Here is the very least that you should know about any protection plans that you have in place:
Life Cover: How much cover is there? When does it expire? Is it dual or joint? Does it have a conversion option? Is it level, increasing or decreasing? How much does it cost?
Income Protection: What is the deferred period? (The length of time you have to be off work due to illness or injury before payments commence). What level of cover do I have? Up to what age will payments continue if I could never return to work again? How much does it cost? Have I claimed my tax relief? (I.P. premiums are tax deductible).
Serious Illness Cover: A.K.A. Critical Illness Cover or Specified Illness Cover. What level of cover do I have? Is it stand alone or accelerated cover? Is it dual or joint? When does it expire? Do I have the option to extend cover without further medical evidence? If you don’t know those details, it’s time to get out the paperwork and find out. You’ll be glad you did.
Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing firstname.lastname@example.org or use the contact form on financialcompanion.i or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM , LMFM and TV3.