€70K salary indexed at 3% per annum = Total Income of €815,040 after only 10 years.

Income protection ensures your lifestyle is maintained when you are out of work through illness, accident or injury. Tax relief is available on the premium payable at marginal rate or as a business expense.  

Your required level of cover will be decreed by your occupation, terms of employment, loan repayments and day to day living expenses. Your cover will commence after a chosen deferred period.

Points to consider: 

• Length of policy – cover is available up to age 70. 
• Deferred Period – that is the time you wait before your policy pays a benefit. It can be 4, 8, 13, 26 or 52 weeks.
• Indexation Option
• Amount of cover. You can insure up to 75% of gross income less current state disability allowance.

• Loss of income
• Difficulty of paying bills/ loans/ paying for education?
• Threat of asset repossession
• Inheritance tax bill
• Funeral expenses, child- care and additional living expenses

Life Cover Calculator

The Cover may be taken out on its own or included in a mortgage protection policy to reduce the burden of mortgage repayments in the event an income contributor becoming seriously ill.

Note:

• Men: 1 out of every 3 will develop a critical illness between the ages of 40 and 70.
• Women: 1 out of every 4 will develop a critical illness between the ages of 40 and 70

Have you considered the plight of your business or family in the event of the death of a key employee, partner, or company director? Business owners and co-owners need to consider what would happen to their share of the business if they died prematurely.

This is a specific life insurance providing compensation to a company director or a business partner. In the event of death of a director or business partner a lump sum will be released, enabling the survivor business partner(s) to buy the deceased person’s shares from their next-of-kin which tidies up a potentially messy situation.

Questions to Consider include:

1. Stakeholders: What would happen if a Business Co-Owner died prematurely?

• Would you maintain control of the business?
• Do you have the funds to buy back their share of the business from their family?
• Has a plan been formalised?

2.  Families: What would happen if you died prematurely?

• Would your family take on your share of the business?
• Would the remaining shareholders have the funds needed to buy your share back from your family?
• Has a plan been formalised?

Keyman Insurance – This can compensate a company for the financial loss of the death of an important member of the business. It can also cover that key person should they become seriously ill. 

This is set up by the company. It is a life policy that can pay out up to 4 times salary to the employee’s or directors’ family. The payment is tax free.  The company pays the premium and there is no taxable liability on the director or their estate.

Self-employed people can set up a “Pension Term Plan” whereby they put a certain type of life cover in place and claim back tax relief at their marginal rate, similar to their pension payments.

Without careful planning an individual’s estate could face a significant tax bill on their death. It is possible to put a life insurance plan in place to lessen or eliminate the potential tax bill. This lump sum can go towards an Inheritance Tax liability on the death of the insured. 

Inheritance Tax is calculated on total assets of the deceased including;  family home, bank deposits, shares, etc. hence, the tax liability, can be substantial and impact greatly on family members.

Estate planning and the issue of Inheritance Tax form an important part of any Financial plan. They deliver peace of mind to you and your family, optimizing the amount that can be passed on in a tax-efficient manner.

Inheritance Tax Liability