Let’s Talk Mortgage Protection

In today’s financial climate nothing is secure….

house

Mortgage Protection

Horror stories of homes lost through failure to meet payments are  still widespread.
Buying your home is one of the biggest financial commitments you will ever make, so putting the right cover in place to protect it should be a top priority.
When buying your home you will typically be required to put mortgage protection in place. This cover ensures that the  outstanding balance on your mortgage can be paid in the event that  you die prematurely, rather than leaving the burden with your loved ones.

PGM Financial Services’ Mortgage Protection is one of the most flexible mortgage protection plans in the market today. It gives you great value mortgage protection with the flexibility to change your level or term of cover as your needs change. If you decide to move house, get married or have/adopt a child, you can increase the cover amount within three months without having to provide further evidence of health.

As well as clearing your mortgage on death, you can also use it to clear your mortgage in the event you suffer a serious illness like cancer, stroke or heart attack. Our mortgage protection package will:

  • Provide you with a weekly amount for up to a year if you are unable to work due to injury resulting from an accident
  • Pay you a daily amount if you are an in-patient in hospital
  • Pay you a small lump sum amount if you break certain bones or have to undergo certain surgeries.

This is a highly flexible mortgage protection plan which allows you to:

  • Increase or reduce your covermor
  • Extend or reduce the term of your cover
  • Add or remove benefits
  • Increase the amount of cover within 3 months of moving house, getting married or having or adopting a child without having to provide evidence of health
  • Move to a new mortgage or family protection plan without having to provide evidence of health if the “Medical Free Conversion” option is selected
  • Avail of a children’s protection package

Case study

John is 30 years of age. He has just bought his first home with a mortgage of €200,000. He earns €2,500 a month and his monthly tgage repayments are €800. He wants to ensure that he can easily change his cover in the future as he plans on moving to a bigger home in about 5 years time.

In the event of serious illness or death

John knows he must have mortgage protection to clear his mortgage so it won’t be a burden to his family in the event of his death. He also wants the security of knowing he will be able to meet his mortgage repayments and maintain his current standard of living if he became ill over the long term and was unable to work.

If this happened his employer would pay him 50% of his salary (€1,250) for the first six months and he will be entitled to the State Illness Benefit of about €10,000 a year.

This would be insufficient to meet his monthly mortgage repayments, maintain his current lifestyle and pay his bills.

The solution

John takes out €50,000 Accelerated Specified Illness Benefit along with his €200,000 Lump Sum on Death cover. If he becomes seriously ill, the bank to which the policy is assigned will use the €50,000 Accelerated Specified Illness Benefit to meet his monthly mortgage repayments.

John also takes the “Medical Free Conversion” option as he plans to trade up in about 5 years time. This option allows him extend the term of his mortgage at a future date, without being medically assessed. This means that if his health deteriorates, he can get future cover at normal rates and not be declined because of his poor state of health at that time.

 

It’s time to look at Investment Funds

While confidence in the markets is steadily returning, recent events such as the UK elections and a possible Greek default have shown there is still a degree of fragility amongst investors and fund managers alike. But amidst these blips there have been some great rates of return achieved. So if these lingering doubts are holding you back from choosing an investment fund, perhaps a Protected Assets Fund is the product for you.

How the Fund sets out to Achieve its Aim

The Protected Assets Fund is designed to provide risk conscious investors with greater choice when it comes to investing their money. This fund offers an investment strategy that has the potential to deliver returns from investing in stock markets but with significantly reduced risks.

Global Equity Returns:

  • Performance is linked to the return of five global stock market indices across Europe, North America, UK, Japan and Emerging Markets.

Explicit Downside Protection:

  • Increases exposure to stock markets during times of stock market stability – to gain from potential positive market performance.
  • Reduces exposure to stock markets during times of stock market uncertainty – to limit exposure from any market falls.
  • Protection is in place that ensures, in any calendar year, the value of an investment (before charges) will never fall below 90% of the highest price in that year. Bank of Ireland (BOI) provides the fund protection to New Ireland. If for any reason, BOI is unable to meet its obligations, investors could lose some or all of their investment.

Historically, shares have offered strong returns for investors – as they have the potential to beat both inflation and deposits over the long term. Investors benefit from both the long term rise in share prices and income received through dividend payments.

The fund aims to take advantage of both the growth and income opportunities offered by investing in stock market indices.

Exposure to Global Stock Markets

The investment return is partly linked to the performance of five mainstream global stock market indices (with dividends included):

Asset Split

By investing via stock market indices, the fund also benefits from:

  • A highly diversified equity-based investment – there is exposure across continents, countries, currencies, industries and companies
  • Reduced risk – as the potential risks involved in choosing a single fund manager are removed

Index Investing

Index investing or passive investing aims to remove the potential risk that comes from choosing a fund manager. By tracking an index the fund tracks the performance of stocks trading on that index. Index funds manage risk by choosing to only track an index, and in turn can be considered less risky than an actively managed fund where a fund manager chooses what specific stocks to invest in across different sectors and geographic regions.

A Proven Approach

Since its launch in December 2010, global stock markets and economies have experienced signifi cant periods of turbulence, periods of market recovery and subsequent outperformance. The chart below demonstrates how the fund has performed since launch:

  • Protecting investors when needed
  • Sharing in global stock market returns

To show this, we have compared the performance of the fund to a basket of global equity indices since its launch. This basket is made up of the five global stock market indices that the return of the fund is linked to – the Eurostoxx 50, S&P 500, FTSE 100, Nikkei 225 and MSCI Emerging Markets (EEM). Exposure to each index is in line with the Protected Assets Fund’s exposure to each of these indices.

Past performance

Looking at the chart we can see:

  • How more stable the performance of the fund has been compared to that of the basket of the indices
  • Late August 2011, highlighted as 1 on the chart, was a very turbulent time for markets. For the fund, as market volatility increased the actual exposure to indices fell and a greater share of the fund was moved into cash to protect investors
  • The chart also shows how the rest of 2011 remained quite volatile for markets, but the fund remained stable
  • From the end of 2011, markets began to recover and as volatility fell and the recovery took hold, highlighted as 2 on the chart, the fund shared in the gains

At PGM, we can help advise you on what fund is best for you, depending on your needs and ambitions. If you’d like more information on this fund or would like to explore what other avenues are available to you, then speak with us today.

 

Warning: The value of your investment may go down as well as up. This fund may be affected by changes in currency exchange rates. Past performance is not a reliable guide to future performance. If you invest in this fund you may lose some or all of the money you invest.

 

Minding Your Financial Monkeys in 2013

Monkeys are very similar to us in many ways. Most have ten fingers and ten toes and brains much like ours. We enjoy watching them because they often act like us…and probably vice versa sometimes!

Minding Financial Monkeys…

Pretend that your bills are financial monkeys who are behaving badly and you have dedicated some time to sorting things out with them.

Some of the monkeys have very demanding owners and even the smallest monkey knows how to scream and shout so minding them can often be challenging and stressful.

Some rules in making decisions on how to get them to behave helps because responding to the noisiest monkey or the most attentive owner can lead to financial mistakes that can hurt you.

The good news is that the rules for minding monkeys are very simple;

financial monkeys should either be fed or shot but never starved!

Using The Rules…

Feeding depends on what food is available, what is the monkey hierarchy bearing in mind, this hierarchy can change from time to time.

You will have superior knowledge and know the financial monkeys who have the highest priorities even allowing for some awkward owners.

Shooting the financial monkeys is often desirable but obviously the extreme option and definitely needs the owners input!

Shooting is giving the monkey back to the owner without any further responsibility for its welfare.

Sometimes its wise to shoot a smaller monkey that needs more attention than it deserves.

Starving monkeys is never a good option because they just get noisier and more demanding. Their owners also get upset and then more than likely will become annoyed and want to visit!

Feeding correctly is getting all monkeys sitting quietly at the same time!

What Next…

Think about your bills as being these noisy financial monkeys that you have been asked to mind and whose watchful owners are never far away.

Use feeding, shooting and never starving as the the rules for keeping them under control, sitting quietly and their concerned owners happy and out of sight

Monkey Talk…

These  financial monkeys can join the other three famous monkeys that see, hear or speak no evil. There is also monkey business and get the monkey off your back and the last word on monkeys for now is…

Don’t let your finances make a monkey out of you!

Kind Regards

Patrick