In this month’s Construction Magazine, Susan highlights the necessity of cover in times of illness.
According to the European Agency for Safety & Health at Work (EU-OSHA), 3 in every 5 workers report Musculoskeletal Disorders (MSD), or complaints in the back, upper limbs and/or lower limbs to you and I.
This year, the theme of Construction Safety Week is aligned with European Safety Week 2021. There is a European wide call to “lighten the load” in Construction, where MSDs remain a significant hazard. Similarly, in their 2019 Annual Claims report, Irish Life highlighted musculoskeletal claims as one of the top three reasons for Income Protection claims. The other two being cancer and mental health claims.
Also contained within the Irish Life report was a statistic relating to Income Protection and Specified Illness Cover. There were over twice as many claims for living benefits than death. In other words, there were more claims for Income Protection and Specified Illness cover than death claims. During your working life, the risk of being diagnosed with a serious illness is a greater risk to you than death. Despite this fact, many people have one or more forms of Life Assurance, such as mortgage protection, but nothing to protect their finances in the event of illness.
Why you need cover?
Your income, while you are working is very important. It has to pay the bills, it has to be saved to accumulate wealth, and it must provide an income for you for the rest of your life.
Consider someone who is 40 years of age and hoping to retire at 65. There are just 25 years’ worth of income to pay off the mortgage and accumulate a fund to provide income from 65 to 85 (based on average Irish life expectancy). This does not take into account any other recurring and non-recurring expenditure over your working life, such as kids, cars, holidays etc. All of a sudden, you can see how important that income is, not just today and next year, but for the rest of your life. You need to keep this income protected to maintain your lifestyle.
The most important insurance
In my opinion, Income Protection is one of the most important insurances you can have in place, to protect your finances. It is an insurance policy that pays your income in the event you become ill or seriously injured. You can cover up to 75% of your total annual earnings, less any benefits from the State. Should you need to make a claim, the income will be paid for you until you are well enough to return to work or you reach retirement age.
Illness and making ends meet
This is also known as Serious Illness cover. This cover, once in place, pays out a lump sum if you are diagnosed with an illness from a list of serious illnesses covered by the plan – including illnesses such as cancer, heart attack or stroke (subject to policy terms and conditions). This lump sum would help remove some of the financial and emotional stress associated with a serious illness, affording you the opportunity to take the time off work, to help pay for specialist medical treatment or even to help cover day-to-day household bills such as childcare. It may also be used to pay off debts while you are recovering. If you are diagnosed with a serious illness, you have enough to worry about – making ends meet should be the least of your concerns. Furthermore, Specified Illness cover can be written as part of a Key Person Policy or Shareholder Protection Policy. This provides additional cover for businesses.
Every year, safety week reminds us to keep ourselves and our workers safe from harm. You should also use it as a reminder to safeguard your future by reviewing your finances and taking steps to keep them safe.
Protection is not just in case we die, but in case we live – or in this case, if we are unable to work if we are ill.
For further information, contact Susan O’Mara in Milestone Advisory via email (susan@milestoneadvisory.ie), or phone (01) 406 8020.
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The Milestone Advisory team are qualified financial services consultants. We specialise in helping professionals in the construction sector and related industries. Our team will work with you to review your finances, explaining your options in clear English.
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