What we do in the Protection industry as Trusted Advisors is important. Protection is sometimes forgotten by us all. Nobody likes to think negatively of illness or mortality and so protection is subsequently thought of less and less as pensions, mortgages, car and home insurance all compete for our limited financial related attention spans.
We feel its crucially important that we remind the Protection industry of its key function in society – as the front line of any financial planning exercise.
Its also an opportunity the ask the important questions. Like how do we prioritise where our monthly financial direct debits go? In all likelhood for most Irish families mortgage or rent payments take priorty followed by the ususal list of payouts such as car insurance, home and contenst insurance, mortgage protection, health insurance, Extra Life cover, pet insurance and so on.
We, as a society, are more likely to purchase Protection for a smartphone than we are to protect our most important asset – our income.
To explain further let’s take, for example, a 40-year-old, working until the age of 68 on a €50,000-a-year salary. He or she will earn a total of €1.4 million over 28-years (not allowing for inflation or wage growth which we would normally assume to happen).
There is gross under provision for Specified Serious Illness Cover, to protect against heart attacks, cancer, stroke etc. and Income Protection in the long term should a person be unable to work indefinitely. How would our 40-year-old fare if illness meant they couldn’t earn? The fallout could be severe highlighting the need for protection.
Its a problem we in Ireland are slowly waking up to.
And despite the fact that there we have a thriving Pharma and IT industry in Ireland,we are still a nation of SMEs.
Why is this important? Well, there are 248,344 SME firms in Ireland yet we are drastically under insured for Business Protection, Income Protection and Specified Serious Illness Cover. Key people run these businesses with little or no Protection, particularly where a situation can become complicated with a spouse or family member stepping into a business. What would you do in these situations?
Not many could answer this. The answer is to seek advice from a Trusted Advisor. Many of these products can be paid through a business. There is also tax relief related to Income Protection – one of the last reliefs left standing with the Revenue Commissioners.
As almost 20 percent of the Irish population lives in rented accomodation, these demographics within society are not obtaining enough financial advice. They, too, need to assess the potential disruption which could be caused by a serious and immediate change to their life circumstances.
We can’t forget that the protracted economic recession left many of us lapsing direct debits on an increasingly frequent basis. While income may have stopped coming in the bills still had be paid on time. Thats a very stressful situation for any indivudual or family to find themselves in. And so it is important to provide adequate Protection for you, your family and your business should the unthinkable happen.