Mortgage Payment Protection
Example 1:
John and Mary are married, with two children. John earns €35,000 per year, which is €2,350 per month approx. Mary works at home. Their mortgage repayments are €1,400 per month. Including insurance €1,500. John has a Mortgage Payment Protection Policy in place covering him for €1,500.
John learns he is to be made involuntarily redundant. The policy will pay out €1,500 per month to John, tax free, for up to one year and he can still claim his Social Welfare entitlements of €812 per month approx.
Example 2:
Sean is single, with a mortgage and a mortgage repayment of €2,000 per month. Sean earns €50,000 per annum, getting paid €3,440 per month. Sean has a Mortgage Payment Protection in place for over three months covering him for €2,000 per month.
Sean has just been given his notice and will be made Involuntarily Redundant. The policy will pay out €2,000 per month tax free (The Maximum) for a period of up to one year. Sean is also entitled to claim Social Welfare Benefit which is paid to him.
Income Protection
Example 3:
Don is a self employed carpenter trading as ABC Carpentry services. Don has noticed a significant slowdown in business and is concerned that his business may not be trading in the short term. Don has no mortgage and earns approx €500 per week after tax. Don has no dependants. Don will not be entitled to social welfare benefits as he is self employed. He has taken out an Income Protection Policy over three months ago and now he is winding down the business, he is prepared to submit his final accounts to the Revenue and cease trading.
Don has an Income Protection policy to cover him for 75% of his after tax income so the policy will pay out €1,500 to him per month for a maximum period of one year, allowing Don enough time to get organised again.
Example 4:
Matthew and Ellen are married with children. Both Ellen and Matthew work Matthew is employed by a large company in Ireland. Ellen is working for a local business. Matthew earns €2,500 after tax per month, Ellen earns €2,000 per month after tax. Their mortgage repayments are currently €1,600 per month.
Matthew believes his employment is less secure than Ellen’s so he wants to take the max cover he can get which is Income Protection of 75% of his after tax wage €1,875 per month. Ellen believes she is more secure than Matthew but would like to cover their mortgage just in case. Both policies are now live for over three months.
The worst possible scenario happens and both Matthew and Ellen find themselves let go from their employment. Matthew is covered for €1,875 per month tax free and Ellen is covered for the mortgage repayments of €1,600 per month tax free. Both Matthew and Ellen are still entitled to claim for Social Welfare. The Benefits can be paid to a maximum of one year each.
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