More to Life Insurance than paying claims when people die
We recently read some very interesting data released earlier this year by the life companies about their 2019 claims experience. It got us thinking again, following a discussion with a client on this very subject. Our client was surprised, as she only associated claims from a life assurance company with pay-outs when people die. We were delighted to then be given the opportunity to paint a far broader picture for her than this.
Living benefits dominate
This was the first figure that we discussed. This data from the life companies revealed that almost three out of every four claims are paid for living benefits and not on death. These claims are paid when people suffer a specified serious illness or are regular payments when people are unable to work because of an accident or illness.
Living benefit claims are significant too
These living benefit amounts are also certainly not paltry amounts! In 2019, the largest specified illness claims paid by Irish Life were €471,400 for a male and €593,900 for a woman. While of course we all want our health never to be compromised, these amounts would certainly relieve some of the stresses associated with a serious illness.
Income protection claims are regular payments paid out (usually monthly) until the claimant either reaches retirement age or returns to work. While the average claim amount in 2019 was just over €17,500, as these claims can continue for many years, they can end up being very sizeable pay-outs indeed.
Becoming ill is an expensive business…
This is a sad but true fact of life. When we take out a mortgage, the bank insists on life assurance to repay the mortgage in full in the event of death. People often have the foresight to have additional cover in place to safeguard the futures of their bereaved family.
However, illness can also be a devastating financial event. The claimant may be unable to work, and their income may cease immediately or quite quickly afterwards. Unfortunately, the mortgage repayments or rent still have to be met, as do the rest of the normal household expenses. On top of this, there may be additional expenses as a result of the illness – a career, personal care requirements and sometimes homes need to be adapted to make life manageable for the patient.
Unfortunately, people do become ill, as evidenced by just one company paying out 5,710 living benefit claims for a total amount of €127.8m in 2019.
This is not an either / or situation (life assurance v living benefits), it is about getting the right cover package in place for your family and for your specific circumstances. We would be delighted to hear about your individual requirements, and like our inquisitive client mentioned earlier, we would love to help you fully protect yourself and your family.