Attitude to Risk - not just for investments

"Attitude to risk" is a term often used to describe an investors sentiment to risk/volatility when choosing investments to reach their savings goal. Every person has a different attitude towards risk when it comes to financial gains or losses and there are varied reasons why each person may be uniquely suited to a specific strategy. In general, though, people tend not to associate risk with deciding on life assurance and serious illness cover.

Just as attitude to risk in investments is based on a persons’ individual circumstance, so too is choosing the right amount of life and illness cover. The usual type of questions you get from an investments perspective is “how would you rate the degree of risk you are willing to take in your financial affairs? The optional answers range from “Extremely low risk to “Extremely high risk”. People generally understand that when the value of their investment/pension goes down a lot it may have a significant impact on their lives if it doesn’t recover.

The same question can apply to a person’s health. If you consider your investment value/pot the same thing as your Body/Mind, the financial impact to a loss of either body/mind can be equally damaging. Part of the difference appears to be that most people really do not believe they will ever become unwell or die, the thinking being that this only happens to other people.

I regularly meet with people to do financial reviews with savings into a pension or growing their money as their priority. Quite often they do not consider life, illness or salary protection important, particularly if they are in good health (which ironically is usually the best time to take out these covers). It doesn’t actually matter if you value these covers or not, what matters is what your honest answer is to the question “If I or my partner died or was unable to work for a prolonged period of time, how would our family cope financially?”. If the honest answer is that you would struggle, then the next question has to be “Why would I not review my cover to see if I can protect our family?”.

I was quite shocked recently hearing news of three different people I know, to have suffered either the death of their partners (in their 40s) and one with a terminal illness diagnosis. A sombre but important reminder that we are all vulnerable to illness and death at every stage of our lives.

Specified Illness Cover… what is it and who can benefit?

We can often take our health for granted and may never give a second thought to what would happen to us, or our family should we suffer an illness. An unexpected serious illness can add emotional and financial worry at a tough time. Should you be unable to work due to an illness or even through the recovery stage, it would be reassuring to know that a Specified Illness policy will at the least ease the financial worry.

How does it work?

This type of cover pays you a lump sum amount if you are diagnosed with one of the specified illnesses covered on your plan. Once accepted, the cost of your cover will never increase during the term of your plan unless you choose to index your benefits or premiums or apply to increase your level of cover.

Once a claim has been successful, the lump sum can be used however you like to help you and your family cope financially during a difficult time. Some examples may include;

• Pay for medical treatment and expenses.

• Help with your mortgage or other loans or bills.

• Invest to provide a regular income.

• Make any necessary alterations to your home.

Children’s Cover

On most policies, children aged between 6 months and 18 years (21 years for children in full time education) of the life insured person are automatically covered for up to 50% of the Specified Illness Benefit at the time of diagnosis, meaning if your child is diagnosed with or undergoes surgery for one of the specified illnesses covered, you will receive up to a maximum of €25,000.

Additional Optional Benefits

You can include a ‘conversion option’ to let you extend your cover at any time without having to provide evidence of your health.

Advance payment of benefit for heart surgery – Royal London provides an upfront payment of up to €20,000 if you need specific heart-related surgery in the future.

New Ireland will allow you to add benefits to protect yourself financially in the short-term in the event of:

·         A stay in hospital (for more than 3 nights)

·         An accident which leaves you unable to work (for more than 2 weeks)

·         Suffering one of a number of broken bones

·         Undergoing one of a number of surgeries listed

Aviva have two additional benefits automatically included at no extra cost called Best Doctors® Second Medical Opinion service and Aviva Family Care (a counselling & psychotherapy service provided by Teladoc Health).

€100 For Cover That May Only Cost €70???

Our new financial planning system has been hugely successful and popular in assisting clients with setting budgets and plans in place for their future. We try to get people to visualise what they would like to have as a goal, whether it is to pay off a mortgage early, retire early, travel the world or simply provide for family later in life.

Another handy way it can help is to configure whether a person has enough protection in place. Whether it is mortgage protection when purchasing a home or perhaps income protection for a self-employed person, the first question we ask is …how much have you got to spend? This is a great starting point as we can then provide various quotes to accommodate this figure without going over budget before we have even begun!

The following is an example of a quote for Joe Bloggs who is a married, 35-year-old, non-smoker who told us that he has €100 as a monthly budget for his protection needs. In his case, the three main areas he wanted to review was protection for his income, life cover for his family and specified illness cover.

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After we provided Joe with these quotations, we were able to inform him that he can claim tax relief on €75 of this cover at his standard tax rate (20% or 40%). This meant that he could save €15 to €30 a month bringing the total cost (€100) of the cover down to as little as €70 per month.

Start Protecting Your Child’s Future

Ever since your children entered the world, you’ve done everything you can to protect them, giving them endless love and attention.

But what about protecting your little ones’ financial futures? As a good friend quoted, ‘the days are long but the years are short’. So the earlier you start taking steps to securing a happy financial future for your kids, the better.

Life insurance

If life insurance has never been a priority, now that you have a family, it could be the ideal time to make it one. Having cover in place will help protect your loved ones if something were to happen and they were no longer able to rely on your income.

Similar to other types of cover, you can tailor your life insurance to suit your needs, choosing from different levels and a range of optional extras.

For instance, critical illness cover can be added to your policy so that if you were diagnosed with an illness covered by the plan, you will receive a cash sum. This money can help to relieve the financial worries associated with critical illnesses, covering time spent off work, ensuring you can still pay household bills, and funding specialist treatment.

And what would happen if you were forced to take a prolonged period of time off work? Adding income protection to your life insurance policy would replace some of your earnings if you can’t work.

Make a will

Not the most pleasant task – but if anything were to happen to you, you want to be certain your family is provided for and cared for by the people you would choose.

You can either write a will yourself, hire a solicitor or use a will-writing service; make sure you research each option thoroughly before deciding, as they all have pros and potential drawbacks.

Part of the process involves you appointing an executor, who will be responsible for carrying out the instructions left in your will. Executors need to be aged over 18 and can be listed in your will, so it could be your spouse or family member.

Savings options

Driving lessons, college, weddings may all seem like a world away, but planning how to build a savings pot to help fund your children’s future will give you a head start.

With the aid of our new financial planning tool we can highlight how best to use your money in order to plan for you and your family’s future. This tool processes all your incomings and outgoings to give a clear picture of where you stand financially, guiding you to make the correct decisions.

Life Check-Up

When you apply for life insurance, you may be asked to complete a medical exam. While the life company will pay for this medical exam, it is also worthwhile booking a medical check-up whether you are applying for insurance or not.

What does a health check-up test for?

The medical check-up determines your risk of developing a range of health problems, such as heart disease, kidney disease, stroke and diabetes. It also provides you with an opportunity to gain practical advice on how to minimise the risk of developing these issues.

Unfortunately, leading a healthy lifestyle doesn’t mean you won’t develop health issues, though it will limit your risk. A medical check-up can flag problems before they develop into something more serious.

What to expect from a medical health check

A health check generally lasts around 20-30 minutes and is usually carried out by a nurse, but it could be another healthcare professional. You shouldn’t need to prepare anything in advance, but it’s always worth asking the health centre you’re booked in with.

During the check-up, you may be asked: 

• If close relatives have had the illnesses you’re being assessed for

• If you smoke and how much

• If you drink alcohol and how much

• What your typical diet is like

• How much exercise you do                                                                                                                          

After this, you’ll undergo a series of simple tests and measurements, including:

• Your weight and height to determine your body mass index (BMI) and your waist may be measured

• Your blood pressure will be taken using a cuff on your upper arm

• A small sample of blood will be taken from your finger to check cholesterol and possibly blood sugar level

In most cases, you’ll receive the results immediately. You’ll be given a risk score (the higher the score the more likely you are to develop one of the illnesses) and will receive advice on how to adapt your lifestyle to lower risk.

What are the benefits of a medical check-up?

According to the Irish Heart Foundation, in 2016 more than 9,000 people in Ireland lost their lives to cardiovascular disease with almost half dying from heart disease.

The Irish Heart Foundation argues that in many cases, heart disease and stroke are preventable. Lifestyle changes such as regular exercise, having a healthy diet and stopping smoking, can have a positive impact when treating diabetes, high blood pressure and cholesterol.

What now?

Choosing the right life insurance cover for you and those closest to you is important and will provide many great benefits and peace of mind. Don’t let the fear of a medical check-up hinder your decision.

Second Opinion?

Being diagnosed with a serious illness would be an emotionally overwhelming experience if it happened to you. You would have lots of questions: What will happen now? Is the diagnosis correct? Will the treatment be right? How can I be sure? Now, there is someone to help you answer these difficult questions. The result could save your life. If you or a loved one were diagnosed with serious illness, Aviva Best Doctors - Second Medical Opinion can help.

What is Best Doctors - Second Medical Opinion and how can their service help?

• Best Doctors - Second Medical Opinion is a global organisation which brings the world’s leading medical expertise to you and your family offering a second opinion when you need it most.

• Best Doctors - Second Medical Opinion has a unique and well-renowned network of over 53,000 peer reviewed medical professionals. Having such expertise at their fingertips and supported by a truly caring service team, is the reason why thousands of people around the world turn to Best Doctors - Second Medical Opinion when they need it most.

• Best Doctors - Second Medical Opinion can help you with those questions that are likely to be racing around your mind if you were diagnosed with a serious illness.

An in-depth review of your medical files will be conducted by a Best Doctors medical specialist to help verify your diagnosis and treatment options. The process can reduce potentially serious complications that can result from a misdiagnosis, and help you and your treating doctor determine the proper course of action.

But Best Doctors - Second Medical Opinion isn’t just for serious life threatening illness. You can use the service for any chronic or troubling ailments affecting quality of life. For example, sports injuries, skin diseases, cancer, blood diseases to name just a few.

This feature is available at no additional cost and Aviva will match the lowest market price available for the cover. It can even be used for conditions diagnosed before you took out your Aviva policy and is available with the following Aviva protection policies.

• Term Cover

• Mortgage Protection

• Specified Illness Cover

• Personal Income Protection

• Executive Income Protection

• Pension Term Assurance

Terms and conditions apply. If you currently have a Life Assurance policy and wish to review your cover, it’s worth consulting a financial broker.

The Benefits of Serious Illness Policies

Most of us do not like to think of how we would manage financially should either a spouse or child become seriously ill. Fortunately there are various options available when it comes to protecting yourself and your family and it can be an important addition if you have no health insurance cover in place.

1.    Standalone Serious Illness Cover
This is simply a Serious Illness plan without life cover. This type of policy is suitable should you have no dependants.

2.    Life & Serious Illness Cover
This plan provides you with both life cover and serious illness cover. If a serious illness claim is paid, the life cover amount remains the same. If you should die during the term of the policy, the life insurance cover will also then be paid out in full.

3.    Life & Accelerated Serious Illness Cover
As with above, this plan provides you with life cover and serious illness cover, however, if a serious illness claim is paid on this type of policy, the life cover amount is reduced by the serious illness pay-out amount. However, if you should die without having made a serious illness claim, the full life cover is paid.

The benefits can vary amongst the different life companies, but most will include the following:

Free Children’s Cover
It is important if you do have children to check this with your life company, as they may be covered for all of the illnesses listed on your policy, and sometimes for other child-related illnesses, such as meningitis.

Waiting list and overseas surgery benefit
Under this benefit the insurance company pays out part of the serious illness benefit, if you are put on a waiting list for certain major types of surgery, or if it is essential for you to have major surgery outside of Ireland.

PTD Benefit                                                                                                                                                     If you become permanently, totally disabled (PTD) from an illness, or condition that is not otherwise covered by the policy, you could claim the serious illness benefit cover under PTD.

The two types of PTD cover are: 

Any-Occupation PTD – you can only claim if you are not able to work at any job. It means you are permanently unable to do many normal daily activities, such as walking, lifting, bending, writing, or speaking.

Own-Occupation PTD – you can claim if you are permanently and totally unable to do your current job. You will usually pay extra for this type of PTD cover. You may not be able to get this extra cover, if your job carries a higher risk of disability. For example, if you are a sports professional.