Did you know....?

Did you know... Multi-Claim Protection can pay out multiple times for different illnesses over the lifetime of the policy and it can also trigger multiple claim components for one illness.

Did you know... Life insurance pays out a lump sum if you die or suffer a critical illness (depending on the type of cover you hold). Death in service is similar. Death in service may be offered by companies as part of an employee’s benefits package. It’s paid out as a tax-free lump sum if you’re employed by the company (i.e. on the payroll) at the time of your death.

Did you know... When you apply for life insurance, you may be asked to complete a medical exam and the life company will pay for this medical exam. It might be a good opportunity to avail of a complimentary check up!

Did you know... Key Person Insurance is a business-specific life insurance (also known as Business Protection) which can compensate a company for the financial loss and other consequences of the death or serious illness diagnosis of a key member of the business.

Did you know...  Income Protection policies and some Life Assurance policies allow you to claim tax relief at either standard tax rate (20% or 40%). This means if you are paying €100 monthly, you may get as much as much as €40 refunded on this premium

Did you know... When structuring life assurance for cohabiting clients and their family, it is important to remember that cohabitants have no automatic rights to their deceased partner’s assets under the Succession Act. By setting up an individual Life Assurance policy on the other person (i.e. Life of Another) with the premiums being paid from their individual bank accounts, this can help avoid a potential inheritance tax bill.

Did you know... If you are self-employed, Shareholder/Directorship Protection is an arrangement between company directors, which allows for a deceased’s directors share of a company to be bought by the remaining Directors.

Did you know... by reviewing your Mortgage Protection policy, you may be able to obtain more cover and additional benefits for the same or reduced price than with your original policy.

Did you know... the application process has become a much easier process these days with the availability of editable PDFs and Docusign …one pro to come out of the current situation!

Did you know... For any change in lifestyle (e.g. New house, starting a family) it is a good practise to review your financial needs and check if you are fully covered or to see where you may require additional protection.

Financial planning is more important than ever….

As a small, self-employed company, these past few months have been a challenge for numerous reasons. But when faced with a challenge, an opportunity can present itself. While I have been unable to meet clients physically, I have been arranging Zoom meeting consultations that are becoming more and more popular and are simple to set up.

The one thing that many people have had for the last 3 months, is time to review their finances and take stock of what exactly they want to do in life. Can you retire earlier than you thought? Pay off your mortgage early? Do you have enough savings? How much is enough life cover? There are many more questions I have been asked and I have been working with clients to try and help them achieve their goals.

As a result, I am finding it now that more and more people are requesting a full Financial Planning review of where they are right now and looking at different options for the future. This process is a lot more straight forward than people might imagine and further information can be found on https://www.drumgoolebrokerage.ie/planning.

1.    You fill out a financial planning statement online, clarifying your personal and financial goals. This is a comprehensive planner and will include anything from the cost of your utility bills to the cost of birthday presents.

2.    Once you have submitted the planner, I review and prepare recommendations and advice.

3.    We discuss these goals, your current financial situation, and strategies to make your goals attainable.

Following this, you decide what step to take next. This plan is just the first stepping-stone and once you have a strategy put in place, we can review this annually with you to see how it is progressing.

I find that one way to handle your personal finance is to treat it like a business. You (and your partner) are the directors of your business. A good business will forecast what is due to come in and out on a monthly basis. It will also have a reasonable idea of what to expect in the longer term, while ensuring that it has the correct provisions and protection in place to carry them into the future….even with some bumpy, challenging times along the way.

A Personal Story...

The following is a story of a couple with three children and how they came to review their finances.

“My husband and I had put off any sort of review for numerous reasons. To be honest we didn’t really understand what was involved in a financial review, we had limited funds at the end of each month and didn’t really think about how we would fare financially if something insidious happened to either of us.

We had a life assurance plan that will clear our mortgage if one of us dies and a small life assurance policy with some serious illness cover. We had discussed the importance of starting a pension (for both of us) but had just never gotten around to it. So before proceeding, we decided to get a financial review. For the review we filled out a budgeting form outlining our day to day expenses and including any other relevant information (like our mortgage and any savings or insurance plans we had).

While our initial intentions were to focus primarily on what should go into the pension pots, during the review we got a clear idea of areas we hadn’t considered. The budget showed us how much money we had each month after all our bills had been paid. We were also able to see a visual graph of our income/savings should myself or my partner die or were unable to work long term…which took us by surprise.

We decided on the amounts to put towards our pensions and then asked our broker to work on our other requirements to keep within a budget of €100 per month. We discussed multiple options to try cover our salary and assurance needs within that budget and he was then able to show how this solution would cover us on the same graph shown to us initially.

After the meeting we felt the following queries (relevant to our situation) were addressed;

-       The length of time we would get a wage from our employer before they stop paying us should we be unable to work for a prolonged period.

-       The cost to protect our income.

-       The figure we could afford per month and the best way to utilise it.

I certainly feel that we now have a better understanding of our finances. We have started to put the correct provisions in place for retirement while addressing additional protection needs. This has been like a medical check-up on our financial health.”

Additional Life Cover

Question: I’ve just had my third child and have been advised to put some insurance in place, but after making some enquiries, I’m pretty confused and have a limited budget. What’s the difference between Life, Serious Illness and Permanent Health insurance?

Answer: Yes, insurance is an important consideration, especially when you have people who will be financially dependent on you. Understanding the benefits of each of these types of insurance can be confusing at times. As a guide, Life Cover pays out a lump sum in the event of your death. There are generally two types; one that lasts for a specific number of years called Term Assurance and a Whole of Life alternative which can provide family protection, protection of your estate and business protection (until death). If you are self-employed, Life Cover can also be used to ensure the financial survival of your business in the event of the death or serious illness diagnosis of a director or key employee (Key Person Insurance). Mortgage Protection is also a form of Life Cover which decreases over time as the policy is designed simply to pay off the balance of your Mortgage should you pass away.

Serious Illness cover pays out a lump sum if you are diagnosed with a specified serious illness during a determined number of years. The list of defined illnesses can vary from company to company but generally most major illnesses like cancer, multiple sclerosis and stroke are covered. It can be taken out on its own or alongside Life Cover. It can also help subsidise a missing income if you or your spouse/partner are unable to work due to illness or disability.

Permanent Health insurance is more commonly called Income Protection and it effectively replaces some of your income (up to a max. 75%) if you are unable to work for an extended period of time due to an accident or illness. This type of policy provides you with a regular income, starting after a deferred period (from four to 52 weeks) with the potential to continue until you retire depending on your health. Affordability is obviously an important factor and your age, current health and the amount of money you want to be insured for all impact the cost.

Conclusion: For any change in lifestyle (eg. New house, starting a family) it is a good practise to review your financial needs and check if you are fully covered or to see where you may require additional protection. One call to your financial broker can help you understand the options available and to ensure you are spending your hard-earned money appropriately.

Spring Clean Those Finances!

We all strive to be ready for any financial scenario which may occur during our lifetime...and to possibly win the lotto! There are always bills to be paid and surprise expenditure that will pop up every few months e.g. car repairs, health bills, house maintenance etc.

In the words of the mantra I like to sometimes use, Fail to Prepare or Prepare to Fail! The best we can do is to be ready and informed. So in saying that, here are a few tips to help you along your financial journey.

• Spending : Know what you are spending your money on and where it is going. A budget can be a very useful tool for seeing where you need to possibly make changes as a result of logging and assessing all of your expenditure. Shopping around for a competitive price when it comes to life assurance/mortgage protection, car/house insurance and groceries is also a good practice for knowing that you are not spending more than is necessary.

• Savings : Short Term and Long Term. Saving an allocated amount each month, be it in the credit union, a pension or a personal savings plan is a very good habit to keep. In the short term, you may have unexpected bills that will come along when you least expect them. So having some type of emergency fund can be very reassuring. In the Long Term, you may be looking forwards to having a retirement pot and to finally reap the rewards of your hard-earned money.

• Protection : Whether you are employed/self-employed, have bought or rent a home or have a family/dependents, it is highly essential to make sure you protect yourself. There are many variations of life assurance, serious illness cover and income protection available. I am just a phone call or email away and can explain the benefits and costs for any of these products.

• Debt : Save on paying high interest charges by clearing any credit card debt monthly. Using a debit card rather than a credit card can also be a better way to manage your day to day expenses and will stop credit card bills building up.

• Be Sensible : Be informed when making financial decisions. Always seek guidance where investments are concerned and be ready for the long game. The markets can go up but you also need to be ready for the down. This will inevitably happen over the lifetime of any investment and a minimum of 6-7 years will give a good reflection of how your fund is performing.

You’ve worked for your money, make sure your money is working for you!

Although I believe commissions will remain part of the process on one level, I have been working on a new financial planning service which I will be offering to new clients over the coming months. Many existing clients have found this a very useful and concise tool in setting out a clear plan for their future. I believe this is a prudent exercise, wanting to know how our future will look and getting the most from our money.

Do you ever imagine what you would like to do in retirement or when your mortgage is paid off or even to retire earlier than you thought?

Some questions and comments I regularly hear when I meet people for the first time are:

• I know I should save into a pension, but can you explain why it’s better than saving into a savings plan?

• What will my pension pay me at retirement?

• I am self-employed, can I protect my income if I am unable to work due to illness or injury?

• I have pensions from a previous employment, can I get access to them on any level or what can I do with them?

• I think I have mortgage cover, but I do not know what it does, can you explain it to me?

• Should I pay more towards my mortgage and if so, what change will it have on my term and interest payments?

• I don’t understand how a life assurance policy payment affects me if my partner dies.

• What is the difference between Leaving Service Options and Retirement Options?

Should a person wish to avail of this financial planning service, it involves a simple 3-step process:

1. You will receive a link to a budget planner where you fill in your personal and financial details. This is a comprehensive budget and will take up to an hour to complete.

2. You submit the planner and I review and prepare recommendations and advice.

3. We meet to discuss the results of your budget, your priorities and how you can better manage your money from a savings / pension / life assurance perspective.

Following this, you decide what step to take next. Either way this process will at the very least be an education to anybody who has no current strategy for retirement or savings needs.

Trump to the left of us, Brexit to the right…stuck in the middle with EU

There has been a lot of uncertainty surrounding Brexit and what impact this will have on people’s investments and pensions. A question I have been asked recently by clients, is whether they should move their investments to a safer fund or stick with their current strategy. At any given time, you need to accept the value of your investment when reviewing it. What you wish it was worth is not as important as taking a cold hard look at your circumstances for how you wish to strategize your investment going forward.

There are some things I would suggest you consider before giving any sort of advice:

•  How long do you have before you will most likely need to mature your investment?

• How much of your money can you afford to lose?

• How will you react if you lose a significant value of your fund? Will you cash in your investment or move to a safer option or remain committed to your fund strategy?

• What portion of your fund/investment would you call significant?

What has this got to do with Brexit? It has everything and nothing to do with it. I would not recommend that people try to time the market in terms of getting in and out of investments. Brexit may be the most immediate danger to the stability of the market, but it won’t be the only one over the coming years. So, if a person learns to see their investment as something that will go through good and bad periods, they will improve their chances of making the right decisions at different times.

One of the important things to note, is how long you plan to invest your funds. The longer you intend on investing your money the potentially greater the risk you can afford to take. The next thing is trying to work out how comfortable you will be with these fluctuations and this will help determine how much risk you can take.

So, what will happen with Brexit? Well, nobody really knows. Perhaps it will be a “Hard Brexit”. Maybe there will be a referendum or an election which will change the direction the UK is taking. What impact this has on investments is anybody’s guess. One would not expect that Brexit should lead to a worldwide recession like the crisis of 2007/08.