Lessons from the past

Volatility is likely to continue in the coming days and weeks ahead, though history does give us some comfort that markets should eventually shrug off these geopolitical concerns and recover. During the Crimean annexation of 2014, investors experienced some volatility, but global equities soon resumed their upward trend as the crisis subsided. Going back further, global markets had a difficult time in the run up to the US-led invasion of Iraq but bottomed about a week before the troops went in and spent the rest of the year going up steadily. Given the daily turn of events, the consequences of the war are very difficult to predict and uncertainty is likely to prevail for some time. In such periods of fast-moving information flows, the general consensus is that it is unwise to make drastic decisions such as encashment or switches until markets have settled and a recovery is in place.

What to do?

Geopolitical events of this kind tend to have a short-term and very unsettling impact on markets. However, the lessons of the past are that markets will adjust in a relatively short timeframe once the conflict is contained. There are, of course, risks aplenty – the geopolitical map of Europe may well be being re-written by these events. We may yet see further aggression by Russia and more severe sanctions and there are risks of contagion into the banking system because of the scale of loss for Russian assets. But the most probable path looks likely to see this (tragically) contained and once it doesn’t result in western military engagement its market impact should see an upward correction in time.

 

For investors the evidence of past events of this kind is to be patient and to focus on long-term goals and objectives, rather than events such as this which can and do buffet markets periodically.

When it comes to other tangible items such as our homes, cars or even devices we don’t think twice about insuring them against damage or unforeseen events.  And for many of us, we have some form of health insurance to assist with medical costs.  The question is though, is this enough?

 

Specified Serious Illness Cover pays you, the policy holder, a lump sum amount if you suffer one of the specified illnesses covered by the policy. The policy pays out a lump sum on diagnosis of some of today’s most common illnesses such as cancer, heart disease, stroke etc. How you use the lump sum is of your own choosing but typically it can be used to help maintain your standard of living or to help you and your family cope financially during a difficult time.   Below lists out some of the more common serious illnesses and some stark stats around them:

 

In Ireland 1 in 3 men will get cancer by age 75.
In Ireland 1 in 4 women will get cancer by age 75.
Five-year average net survival of Irish cancer patients for the diagnosis period 2012-2016 is 62%.
Approximately 10,000 people suffer a stroke in Ireland annually.

Sources: National Cancer Registry of Ireland (2020)
Cancer in Ireland 1994-2018 with Estimates for 2018-2020: 
Annual Report of the National Cancer Registry; 
Irish Heart Foundation 2017.

 

Most providers now cover in the region of 40 – 53 illnesses in their Specified Illness Policies, however, the range and extent of cover can vary from one insurer to another.  Claims statistics show that malignant cancer, heart related diseases and stroke account for the highest proportion of claims.

 

Like most insurances, it is important to choose a policy that provides the most suitable cover to meet your particular needs. Not only does the extent of cover differ from one insurer and policy to another but even the definitions of an illness that qualifies for a claim can be different.  Some insurers also add in partial payments for certain conditions that make their policy more attractive and relevant.

 

Affordability

Specified Serious Illness Cover can be taken out on a standalone basis or be incorporated into a policy that includes life cover.  It can also be taken out to cover yourself (single cover) or you and your partner (joint or dual cover).   These factors along with the amount of cover, the term of the policy, your age, smoker status, health and family medical history determine the cost. We have the tools here to conduct a full and fair analysis of the market, ensuring that we find the appropriate policy for you.

 

If you would like to discuss how Specified Serious Illness Cover can be built into your financial plan, please do get in touch.

In a perfect situation we would all start a pension plan from the day you receive your first pay cheque. Not only does that not happen for so many reasons but it is estimated that one in three workers have no private pension plan. This situation is even more stark amongst the self-employed where the temptation to keep putting off the decision to do something is even greater. The good news, however, is that it is never too late to start.

It can be difficult to make the decision to lock up your contributions in a pension plan but no matter when you start it is always worth doing. Ask yourself the question if, when you reach retirement age, will the State Pension, currently €253 per week and payable from age 66 be enough? If the answer is the obvious no, then you need to do something. Here are a few tips to help you to decide what you need to do.

 

1. Start as soon as you can 

• Make no mistake, the starting point is the most important point when it comes to pensions.
• Of course, it is hard for someone in their 20s to think about saving for their retirement - and it is made even harder in a fraught economic climate.
• But the sooner a pension is started, the less a person will have to save. Someone who is 25 and takes out a pension is saving themselves a world of financial pain in the years ahead. If they wait until they are 40, they will need to put aside over 4 times to get themselves the same return.

 

2. Never panic though 

• More than 50 per cent of the population does not have a private pension.
• While it is better to start a pension early, that doesn't mean it is ever too late to start, it simply means that the later the start the more you may need to put in.
• Counterbalancing the late start is probably a greater degree of affordability as you get older. 

 

3. Mix things up   

• Regular monthly payments are the least painful way to build your pension fund.
• Don't just decide on a sum you're comfortable putting into it and leave it at that. Change the payment amount as your life circumstances change.
• If you get a pay rise you can increase it, if you have children you can reduce it (but only slightly). If you are due a bonus you can put in a once off lump sum.

 

4. A necessity, not a luxury 

• Putting pension money aside for your future retirement should be considered an unavoidable outgoing and not a luxury.
• It is right up there with a mortgage, food, clothes and electricity as one of the things people need to realise that they cannot do without.

 

5. Keep tabs and get good advice

• You should check your pension plan regularly.
• Having access to a good adviser who will steer you through the process and carry out regular reviews with you is vitally important. This is what we do.