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Do you understand your Life Cover policy and the benefits it provides? There are numerous protection products available to Irish residents, designed to provide financial compensation to individuals and their families should a loved one suffer an untimely death. It can be difficult to know exactly how much Life Cover you require; therefore, it is important you make time to sit down and seriously consider your potential future needs.

Many people focus on their mortgage and arrange a Mortgage Protection policy to satisfy the requirement of their mortgage loan agreement. This is the cheapest method of providing Life Cover; however, the level of cover continually decreases and the purpose of this type of policy is only to pay off your mortgage in the event of death. Although your mortgage will be cleared you should also consider what the surviving spouse and children will rely on if there is a substantial reduction in the family's income.

Most people with a family will accept that it is necessary to cover the financial implications of a death but may not think about what would happen if they contract a serious illness. Many people also underestimate the level of cover that is really required. For example, a €200,000 pay-out from a life assurance policy will only last six years for a household with an annual expenditure of €30,000. This money must cover their family’s living costs and other expenses and if you lose your income because of a serious illness; i.e. cancer, heart attack, etc. but do not suffer death, there will be no payment from a Life Cover only policy.

It is important to do your calculations when it comes to protection to know how much your family will really need in the event of a claim.Typically, it is recommended that 10 to 15 times your current annual income is needed to maintain the same lifestyle. Another way to measure is that the cover should ideally continue until your youngest child has fully completed their education and hopefully becomes financially independent.

It can be extremely beneficial to meet with a Qualified Financial Advisor to discuss your overall financial situation. They will try to help you decide on a level of cover and benefits appropriate for you, taking the following factors into consideration: What level of income will be missing? What outgoings will cease? What outgoings will continue? What income you might qualify for on the death of a spouse; such as Widow’s Pension? Are there any life events or ad hoc payments needed; e.g. a wedding or child’s education?

Regardless of how much cover you require, the key factor is how much you can afford. It is important not to take out a level of protection that you will struggle to pay each month. Life Cover and Serious Illness Cover should give you peace of mind, not be a source of worry. To get further details on the most affordable and efficient cover for you, you should contact a Qualified Financial Advisor.

Robert Downes, QFA RPA is a Qualified Financial Advisor. You can contact him through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on robert@jfl.ie