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Income Protection

Income Protection. Presentation for All Financials August 2007. What is your largest financial asset?. Is it your home? 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.

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Income Protection

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  1. Income Protection Presentation for All Financials August 2007

  2. What is your largest financial asset? • Is it your home? • Is it your business?

  3. Your Income is an Asset... • Annual salary of €60,000, aged 40 • Earnings to retirement = €2.1M *Based on retirement age of 65

  4. Creating the Need … who will pay all these bills ? VHI/ BUPA Clothing Insurances BEST ADVICE Entertainment Mortgage Light & Heat SOCIAL WELFARE €185pw SALARY Food Child-care Car Loan Holidays Savings & Investments Life Cover

  5. The Big Drop €40,000 €14,000 €0

  6. Income Protection - Product Review • 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

  7. 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 Premium depends on ….

  8. Examples Of Occupation Classes Class 1 Class 2 Class 3 Class 4 Accountant Dentist Driving Bar Person Examiner Office Estate Agent Baker Mechanic Worker Insurance Social Carpenter Doctor Broker Worker Restaurateur Tiler – Floor Builder Cashier & Walls

  9. 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

  10. Peace of mind …. • 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

  11. Benefit Limits • 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

  12. Position the cover • “Deluxe” cover - not everyone can get it • Depends on your occupation, health history

  13. It will never happen to me ... • 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 …...

  14. 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. Value for Money Total Cover: €1,257,611

  15. Company Directors • 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.

  16. The Business Owner • 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

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