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14 Jul

Deposits

  • Deposits are current or demand accounts held at a bank or credit union.  Returns on deposits are paid out as interest and pay either monthly or at the end of a term.  Interest rates are based on ECB rates.
  • Deposits do not keep up with the rate of inflation so this would be considered a risk.  Since rates are based on ECB rates, there is also a risk of interest rates changing and no longer meeting your financial objectives.
  • Another risk is that the bank or financial institution could default, however deposits are covered up to €100,000 by the Deposit Guarantee Scheme.
  • Typically with deposits, there is no term in time.
  • Interest is usually subject to DIRT and PRSI.
  • Access to funds is quite easy and there are no explicit charges.
  • Deposits are suitable for investors who need readily accessible emergency funds; allocation of a portion of portfolio to meet diversification goals; and risk-adverse investors.

 

14 Jul

Mortgage Protection Assurance

  • Mortgage Protection Assurance is a lump sum benefit in the event of death, serious illness or both.
  • Cover decreases each year in line with the mortgage.
  • Optional benefits usually do not apply.
  • Cover is in line with the term of the mortgage.
  • Costs should be kept in line with the mortgage as payment of the mortgage is paramount.  Paying extra would be advised to ensure mortgage is covered.
  • Costs vary by age, smoking status and policy term.
  • Premiums and cover are guaranteed.
  • No tax relief on premiums and no tax on benefit.
14 Jul

Whole of Life Assurance

  • Whole of Life Assurance is a lump sum benefit in the event of death, serious illness or both.

 

  • Optional benefits can only be added on unit-linked policies.  An example of an additional option is indexation of benefits with inflation (cost of living adjustment).
  • Cover is usually whole of life but could be dependent on an investment assumption. For example, if the policy under or over performs in unit growth or policy bonuses additional premiums might have to be paid to keep policy standing.
  • Costs vary by age, smoking status and in unit linked cover investment / bonus assumptions.
  • In unit-linked premiums and cover are not guaranteed and are subject to investment or bonus performance.
  • In Whole of Life policies, premiums and cover are guaranteed and premiums are substantially higher than where guarantees do not apply.
  • No tax relief on premiums and no tax on benefit.
10 Jun

Temporary Life Assurances

  • Temporary Life Assurances are a lump sum benefit in the event of death, serious illness or both.
  • Optional benefits may be added; some examples of options are: conversion to permanent life assurance; indexation of benefits with inflation (cost of living adjustment).
  • Term of coverage is usually between 30 to 35 years.
  • Costs are the lowest and vary by age, smoking status and policy term.
  • Premiums and cover are guaranteed.
  • Tax relief may apply on premiums within certain limits and conditions; otherwise there is no tax relief on premiums and no tax on benefit.