Making Cents: Rental protection vital as illness can strike anytime
No longer the preserve of students and young workers in their 20s, many people are now settling down and raising families in rented homes. One area of concern this raises is the level of protection these households have in case of anything happening to the breadwinner(s).
“Some families may well have adequate protection in place,” Amelia Walshe of life assurance company Royal London said. “But in the absence of any rent control laws in Ireland, families who are in less financially stable situations will largely have no choice but to accept the costs of renting. They must meet monthly payments regardless of any financial difficulties which they may find themselves in.”
When people buy their own home, they are expected to take out mortgage protection cover. This is normally a condition of the loan insisted on by the bank. They want to know that, should you die before the end of the mortgage term, there will be a lump sum to repay the outstanding balance. Although this is purely self-interest on the bank’s part, it also protects the mortgage-holders - enabling the surviving family to remain in the family home with the mortgage paid off and without the need to pay rent. Families who rent have no such protection. Although many who rent are saving with the intention of buying once they can afford it, they should strongly consider taking out protection in case the worst happens while they are renting.
Walshe suggested: “While there is no dedicated ‘rent protection’ insurance product on the market per se, those who are renting long-term should consider putting life and specified serious Illness cover in place to ensure their rent and other ongoing expenses will continue to be paid for their family should anything happen to them.” Those who do have mortgages should also review their cover regularly to check that it is still sufficient based on their age, family situation and monthly expenditure.
“While it’s great that people recognise the importance of putting life cover in place to protect their family financially, often they don’t consider if they have enough cover,” Daragh Feely, Broker Sales Manager at Royal London said. “Having €200,000 worth of life cover might seem like a lot but when you actually crunch the numbers; this amount will not go very far, lasting only for about 3 or 4 years if you have monthly outgoings of €4,000 to €5,000.”
Families should also consider taking out Specified Serious Illness Cover - to provide a lump sum if the holder is diagnosed with one of the specified serious illnesses covered during the term of the policy.
Based on statistical probability, of a group of people all aged 30, 56% of them will be diagnosed with a critical illness over the course of their lifetime.
The average age for a Specified Serious Illness claim in both Ireland and the UK is a lot lower than you might expect.
“While most of us plan to live into our 80s, the average age of a serious illness claimant in both countries is frighteningly low, at just 47,” said Greg Dyer, Head of Operations at Royal London in Ireland.
None of us like to think of these issues, but it is a fact of life that a certain number of families will find themselves dealing with a serious illness or bereavement much sooner than they would have expected.
“We all know the financial effects of suffering a serious illness can be devastating,” Dyer said. “If you were sick and unable to work, just how would you take care of your family’s financial needs such as household bills, school fees, motor expenses and other living costs? And indeed, there may be additional financial strains caused by you suffering a serious illness.”
If you would like more information about these protections you should speak to a Financial Advisor. The Competition and Consumer Protection Commission also provide information on life and serious illness protection at www.consumerhelp.ie.
DEAL OF THE WEEK
HALLOWEEN is over so we are officially allowed to start talking about Christmas. Buying some of your gifts in November is a great way to help spread the cost.
More and more of us are shopping online and one of the first ports of call is Amazon. The mammoth retailer sells everything from garden sheds to nail art and can be a great source of gifts. But if you find the sheer number of products on offer overwhelming, www.moneysavingexpert.com have a great tool that will help you search particular ranges and find bargains.
Their Amazon Discount Finder manipulates Amazon web links to create customised bargain basement pages. So if you are looking for a television for example, choose the category and sub-category for TV and then input your price range and how much of a discount from the original price you are hoping to get. It will list all the TVs for sale at a discount in your price range.
You can easily adjust the discount levels as you search for the right product. A nifty idea that should cut down on your browsing time in the hunt for a bargain.
