According to research recently carried out by New Ireland Assurance with Irish homeowners, critical illness insurance and income protection insurance are the most confusing of all the insurance policies on the market that provide cover against illness or death.
Just over one third of Irish homeowners understood the financial benefits that a critical illness insurance policy could provide if they became seriously ill. However in stark contrast, a massive 87% of adults had a good understanding of the value of health insurance such as VHI, in the event that they required medical treatment.
With the latest Census report counting over 560,000 people living in their own home with an outstanding loan or mortgage in 2006, it was no surprise that Mortgage Protection insurance was well understood by seven in ten Irish homeowners surveyed by New Ireland.
However, it is estimated by industry sources that just 20% of homeowners have any financial protection in the event that they become seriously ill and are unable to work for a time. Mortgage Protection will only repay the lender should the homeowner die and does not cover the ongoing repayments should they be unable to work due to a serious illness. Adding a critical illness benefit to your mortgage protection can often be the best time to insure yourself, as the cost will be less the younger you take it out, and you will benefit from qualified financial advice as to the best policy to suit your needs.
New Ireland’s critical illness claims experience for 2006 demonstrates the relatively young age that people can be diagnosed with a serious illness. The most common illness amongst women was Cancer with 71% of female claims relating to the disease, an increase of 11% on 2005. And surprisingly, one- quarter of all claims were made by women still in their thirties, with the average age of female claimants just 45 years.
Male claims show a greater bias towards the age group from 40-59 years, accounting for almost two-thirds of serious illness claims in 2006. In fact industry research shows that a man has a one in four chance of suffering a critical illness before retirement.
Commenting on the critical illness claims Noel Finnegan, Head of Underwriting, New Ireland Assurance said, “It is worrying to see how relatively young many of our female incidents of critical illness claims were in the last year compared to previous years. The good news though is that as medical techniques advance, more and more people are surviving serious illnesses. However for some, returning to work is not always an option, for example three-quarters of stroke victims who survive, experience a residual disability, and of those diagnosed with malignant Cancer, 51% will live five years or more. This is where critical illness insurance can really play its part, helping to ease the financial burden on families.”
New Ireland paid out 26% more in critical illness claims in 2006 than the previous year, with an average claim of €70,000 or more than six times the average SSIA lump sum. With the consensus amongst Irish homeowners that they will tap into their savings should the worst happen, this comparison might make them re-consider just how far these savings would go if they could not return to work.
“We believe that the biggest reason for low take-up of critical illness insurance amongst Irish homeowners is down to a lack of knowledge of the product’s availability and a general confusion between this and income protection. Both products have a place in the market it really depends on whether a large lump sum payout and/or an ongoing percentage of your regular income will suit your needs better,” concluded Noel Finnegan.
Contact:
Laura Erskine
Public Relations Manager
New Ireland Assurance
Ph. 01 6172586
Mob. 086 8562929
Research conducted by W5 Marketing Intelligence during May 2007 with a nationally representative sample of Irish homeowners.