Income Protection
Presentation for All Financials
August 2007
What is your largest financial
asset?
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Is it your home?
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Is it your business?
Your Income is an Asset...
 Annual
salary of €60,000, aged 40
–Earnings to retirement =
€2.1M
*Based on retirement age of 65
Creating the Need
… who will pay all these bills ?
VHI/
BUPA
Clothing
Insurances
Entertainment
Light & Heat
Mortgage
SOCIAL
WELFARE
SALARY
€185pw
Food
Child-care
Car Loan
Holidays
Life Cover
Savings &
Investments
The Big Drop
€40,000
€14,000
€0
Income Protection - Product Review
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Policy that pays you an income if you’re out
of work for more than 13, 26, or 52 weeks
If you can’t do your own occupation
Premiums are guaranteed
Full tax relief on premiums at marginal rate
Pay out in 90% of claims
Hospital Cash after 8th day
Premium depends on ….
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-
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Guaranteed (exclusive to FF)
Reviewable
- 5th anniversary & every 5th after that
Level or Indexing options
Occupational Class e.g.
• 1 Office worker
• 2 Salesperson – driving
• 3 Vet
• 4 Carpenter
Length of deferred period - 13, 26 or 52
weeks
Ceasing age - 55, 60 or 65
Examples Of Occupation Classes
Class 1
Class 2
Class 3
Class 4
Accountant
Dentist
Driving
Examiner
Bar Person
Office
Worker
Estate Agent
Baker
Mechanic
Doctor
Insurance
Broker
Social
Worker
Carpenter
Cashier
Restaurateur Tiler – Floor
& Walls
Builder
Occupations
The cost options:
Gold:
Deferred 13 weeks, ceasing age 65,
indexing
Silver:
Deferred 26 weeks, ceasing age 60,
indexing
Bronze:
Deferred 52 weeks, ceasing age 60, no
indexation
Peace of mind ….
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Guaranteed premiums
Help to get back to work if you need it
– Rehabilitation Benefit
– Proportionate Benefit
– Linked Claims
– Health Claims Service
Ability to increase your level of cover by
30% every 3 years - Guaranteed Increase
Option
Changing Occupation
Benefit Limits
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Min SA €100 p.w., Max €3,365 p.w. (€175,000
p.a.)
Increases to €4,080 p.w. (€250,000 p.a.) for
“special occupations”
Calculation of benefit:
– 75% of income, less single person’s social
welfare amount (€9,622 per annum)
Max Benefit Calculation
• 75% of first €125,000 plus 33% of balance
to maximum of €175,000
• less state single person disability benefit
• less any continuing income
Position the cover
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“Deluxe” cover - not everyone can get it
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Depends on your occupation, health history
It will never happen to me ...
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Likelihood of long term absence is twice as
high as likelihood of critical illness
Average claim payment is for 5.5 years
Longest claimant - 27 years (still paying)
Claims currently being paid …...
Policy Start Date
26-Apr-81
28-Feb-88
16-Dec-94
09-Dec-93
08-Dec-99
11-Jun-99
Claim Started Age claim
started
07-Jul-87
42
24-May-94
40
29-Feb-00
52
06-Jul-01
36
09-Feb-01
44
01-May-03
39
Occupation
Accountant
Butcher
Engineer
Radiographer
Insurance boker
Sales Director
Cause of claim
Benefit Paid
to Date
Cardiomvopathy
€120,000
Rheumatiod Arthritis
€125,000
Brain Haemorrhage
€59,400
Manic Depression
€48,400
Cancer
€60,000
Multiple Sclerosis
€28,000
Value for Money
Cost versus Benefit
Male Age 31 n.b, to age 65, Class 2, Deferred
Period 26 weeks, premium and benefit
escalation
Benefit:
€20,800 p.a. (€400 p.w.)
Gross premium €47.42 p.m.
Net premium €27.50 p.m.
Company Directors
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Company pays the premium - its free
for the client
Tax relief for the company, treated as
company expense - reduce the
company’s tax bill
No BIK
Pension contribution protection so can
have more than 75% of salary
covered, up to €40k p.a.
The Business Owner
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Company Directors can take out Executive
Income Protection - company pays the premium
Position as business insurance - necessary
business expense
If out of work for medium period - need to
ensure the business is still there is come back to
Can cover net profit amount to ensure own
salary drawings are covered, plus money to keep
business going
If business ultimately needs to be sold, then
profit made from this does not effect claim
payment