We await with interest each year the claims statistics from the leading protection providers in the Irish market. Irish Life annually issue very insightful and detailed information about their claims (as do other providers), and we’ve taken the opportunity to dig a little into the claims data from their Retail division for 2021. 

We never forget that the whole purpose of insurance is to pay claims to those who are unfortunate enough to require them. This is why we all insure ourselves against the financial impacts of death, an illness or an accident. The Irish Life data demonstrates how claims sit at the heart of their business – they paid out €171.9 million in death, terminal illness, specified illness cover, income replacement and rider benefit claims during 2021, under 3,453 plans. This equates to €3.3 million per week.

We were particularly interested to see how the pandemic has affected claims. While the volume of claims paid by Irish Life during  2021 were on a par with those paid during 2020, overall claims numbers paid were almost 20% lower than 2019 (i.e. pre pandemic). Death claim volumes paid during 2021 were lower by 11% and specified illness were lower by 18% on 2019.

So, protection claim volumes paid during 2021 were still substantially down because of the pandemic. This is probably due to the reduced participation with national screening programs, decreased availability of medical investigations, people not attending GP’s or specialists as often, and delayed legal processes during lockdowns. However, over the latter part of 2021 and into 2022, it does appear as if new claim notifications for death and Specified Illness Claims (SIC) have started to return to pre-pandemic levels.

Death Benefit Claims

Irish Life paid 132 COVID-19 related death claims to the value of €7.9 million during 2021. The average amount paid was €59,000. While the median age was 70 and most had a pre-existing medical condition, they did pay seven claims to lives under age 50. Typically, the underlying conditions were cancer, heart disease, diabetes, respiratory illnesses and dementia.

Sadly, Irish Life also paid 32 Terminal Illness (TI) claims during 2021 – this is where a death benefit is paid out on the diagnosis of one from a list of terminal illnesses.  The total value of these was €4.1 million, with the average claim amount being just over €120,000 and with average plan duration of 13 years. The average age of claimants was only 51 for women and 56 for men. The two biggest cause of TI claims in 2021 were for malignant brain and lung cancers.

Specified Illness Claims

The biggest individual medical causes of specified illness cover claims were: 134 breast cancers (18% of total claims paid, which is up on 2020), 73 heart attacks (including 10 on female lives), 72 prostate cancers and 48 strokes. Overall, 78% of SIC claims on female lives were for malignant cancers. Malignant cancers were also the biggest cause of any SIC claims between the ages 51-60.

62% of claims were for lives aged between 41 and 60. So again, key age ranges where our customers will very likely have families and financial commitments.

In summary, while the overall volumes of Irish Life claims paid are not yet back to pre-pandemic levels, this has already started to change.  We remember every time we read these figures that behind every claim is a person or family that needed the financial protection of the products we recommend. That’s the ‘moment of truth’ for us as an advice profession and an industry as a whole.

This is the first in a series of articles that will be aimed at people at different stages of life. Today we're starting with those in their younger more carefree years, but probably with an eye on financial planning - the 30 somethings! For this group there are lots of competing priorities – a house to be bought, maybe a wedding to be celebrated or a family to be started. And these also don’t take into account the holidays, cars and social life that are there to be enjoyed too... So here are our thoughts on some of the important financial challenges facing this group.

Protect yourself and your family

It starts with having a financial safety net. This really consists of two elements. First of all, we always recommend that clients have an emergency fund in place, just in case you suffer an income shock due to the loss of a job or an illness. Where it is possible to do so, we usually recommend that you have a minimum of 6 months' net income that you can call upon in an emergency.

The second element is having enough life assurance, illness cover and suitable health insurance in place. While hopefully you may never claim on your life assurance or illness policies, these are really important for the security of your family should an unwanted and unexpected event occur. Health insurance is also required, to protect your family in relation to all those medical bills, and gaining you speedy access to specialist medical services as required. 

Adopt a savings mind-set

This is an important starting point – to recognise the importance of saving for different timeframes, including retirement. We’re not suggesting that you stop spending, as life is definitely for living... But we are suggesting that you take a balanced approach to your finances; spend money on things that matter to you, avoid frittering money away and take a strategic approach to your financial future rather than simply hoping everything will turn out ok. Saving money is a key pillar of a strategic approach to your finances.

Pay yourself first

We sometimes find with clients who are in or around their 30’s that while the intention to save for medium to long term goals is there, the reality is that it just doesn’t happen. Saving for the likes of  retirement sometimes falls to the bottom of a long list of priorities and just doesn’t make the cut. So our advice is to reverse the priorities. Pay yourself (by moving money into a savings account or pension product) first, immediately after you get paid each month. As a result, something else will suffer – this will usually be a discretionary spend such as that 2^nd coffee bought every day or the extra takeaway dinner every week that actually adds little value to your life.

Understand the impact of debt

Debt plays an important role in all of our lives, whether it is a mortgage for your house or a loan for a car etc. We all know the folly of running up credit card debts and also borrowing to fund our lifestyle. However the simple availability of debt can really hurt your financial planning too.

Take the example of someone who gets a salary increase. This increases your spending / saving power. Some people unfortunately see this as an opportunity to immediately change the car and borrow more money, as additional repayments can now be afforded. Yes you’re driving a nicer car, but your salary increase now has no impact on improving your financial future. We’re not killjoys who think you should save every extra euro, but positive financial developments such as salary increases should reward you both today and tomorrow. And remember, interest rates can only go one way from where they are today...

Don’t waste windfalls

Similar to the last point, windfalls that quite often are in the shape of pay bonuses are an opportunity to dial up your enjoyment of life today (after all you’ve earned it), while also improving your future. Set yourself a personal commitment to save a certain percentage of any windfalls you get for your long-term future, while enjoying the balance of that bonus today.

And really achieving balance is the key point that we are attempting to make. Yes enjoy the financial opportunities that present themselves to you today. But don’t do it at the total expense of your financial future later in life.

Avail of any “free” retirement support

This final point applies to anyone who is fortunate enough to have a benevolent employer who agrees to pay into a pension scheme for you. This will often be done on the basis of “matching” your own commitment, up to a certain limit. Don’t let this opportunity pass you by.  This is effectively free money for you and a reward for sound financial behaviour carried out by you. Always avail of this opportunity to the maximum that you are able, as it is usually offered on a “use it or lose it” basis – if you don’t avail of your employer’s matching contribution in a given year, you can’t come back looking for it later.

So there we have it, some financial "food for thought" for those in their 30s. We look forward to hearing from you as you seek to put you and your young family on to a firmer financial footing.