6. Protection Why do we need protection cover?
Type of Protection Policies
The main purpose of protection is to provide for you or your dependents in the event of a certain event happening.
There are 3 types of protection policies:
Without some form of financial protection, you and/or your dependents could be left financially destitute in the event of you dying or getting seriously ill. The level of protection taken out should be commensurate to your personal and financial situation e.g. somebody with a dependent spouse and 3 young children needs life cover more than somebody who is single with nobody financially dependent on him/her.
Life Cover (on death) • Life cover will provide a lump sum to either pay off a mortgage or to simply provide a lump sum on death • A lot of employees have ‘Death-In Service’ cover through their employment of 4x salary. This however ceases as soon as they leave employment Specified Serious Illness Cover • This type of cover pays out a one-off lump sum if you are diagnosed with a predefined ‘serious illness’ • The list of specified serious illnesses in the contract with the life company needs to be closely looked at before committing to the plan
10 Financial Planning in Ireland – A Simplified Guide
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