University of Limerick Income Continuance, Life Assurance & AVC Plan’s May 10th 2012

Fiona O'Donnell & Jim O’Neill

Marsh/Mercer Employee Benefits Ltd

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Area’s Covered Today

• Background to Income Continuance Plans

• Benefits– Protecting your income– Peace of mind for you and your family– Payment & tax relief– Ease of purchase & payment– Plus optional Life Assurance– AVC’S– LMAVC’S

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Some Facts….

• 1 in 6 Irish working adults will be disabled for more than 6 months

• Public Sector Employees Sick Pay Scheme ends after 12 months

• You are likely to suffer a substantial reduction in income if you fall ill

• For a single adult the Social Welfare disability is approx €188 a week

• For a family with 2 dependants this figures rises to approx €377 a week

• How would this reduction in income effect you & your family

• In the present environment, how would you survive?

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Income Continuance PlanRelevant Public Sector Experience

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Public Sector Sick Pay Scheme

• Typically for most public & civil servants….– You receive full pay for 6 months– This reduces to half pay for 6 months– This reduces to zero after 12 months

• The average claim duration is 5.5 years.

• Once you have been ill for a full 52 weeks in any four year period, the plan pays you a benefit sufficient to “top up” any Ill-health Early Retirement Pension / Social Welfare Disability Benefit entitlement to up to 75% of your pre-disability salary.

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Public Sector Employee Without Income Protection – Based on a salary of €40,000

100%Pay

€769per week

50% Pay

€385 per week

27% Pay

€197 per week

First 26 weeks of illness Second 26 weeks Week 53 onwards

Social Welfare or Early

Retirement

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Public Sector Employee With Income Protection – Based on a salary of €40,000

100%Pay

€769per week

50% Pay

€385 per week

27% Pay

€197 per week

First 26 weeks of illness Second 26 weeks Week 53 onwards

€192 per week

€369 per week

Income

Protection

75% of Salary

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Claims Synopsis

• General Stats:

• Typically over 90% of claims are paid .

• The average payment is €18,000 pa

• Average Claim lasts 5.5 years

• Some Claims stats:

• Over 95% Claims Acceptance Rate.

• Friends First have paid approx €4m in Income Protection Claims in the period 01/01/2007 to 31/12/2010.

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Claim Illness Types

Claim Illness Types

Addisons disease

Anxiety & Depression

arthritis

Cancer

cellulitis

diabetes

Surgery

Blood Pressure

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UL ICP & LA Cost & ease of payment

• Premiums are based on a percentage of your income

• Premiums are deducted at source for ease of payment

• Premiums attract tax relief at source

• You can arrange Life Assurance also

• Cost for the Income Continuance is .6% of salary.

• Life Cover costs .558% of salary for a benefit of 2.5 times salary.

• 3 Months Free Cover

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ICP FAQ’S

• What if I take a career break and wish to reactivate my UL Income Continuance Plan on completion of my career break without having to undergo medical underwriting?

• Ans: Yes this option is available provided you apply within 2 months of taking a career break and your career break is no longer than 12 months. To ensure immunity from medical underwriting on your return you must pay 33.33% of your normal contributions.

• What if I am job sharing ?

• Ans: Benefit is based on your job-sharing salary, premiums are also based as a % of your job-sharing salary.

• What if I take Parental, Maternity or Adoptive Leave ?

• Ans: No premiums are collected if your period of leave is no longer than 18 weeks in total, no claw back of premium is required and your benefit remains unaffected. If the period of leave is over 18 weeks than you will have to pay premiums to ensure that your cover is not affected.

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Income Continuance PlanFundamentals of Account Management

Key Deliverables

Consistency of Service Excellence

Administrative Efficiencies

Truly Understanding

Our Clients’ Business

Utilising Technology

Handling of Queries and Claims Support

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Income Continuance PlanMarketing support

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AVC’S

• AVC’s are personal savings plans for retirement and can be either short- or long-term in duration.

• They are designed to generate a fund which, on retirement, can be used to provide additional benefits.

• All deductions are made directly from your salary

• Multiple fund managers and a variety of funds available – from low to high risk – to suit your individual circumstances

• View and manage your investment online

• Qualified Mercer experts will guide you through all your pension planning options

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LMAVC’S

• A Last minute AVC is an excellent way of funding any shortfall in pension provision between the tax-free cash lump sum provided for within the superannuation scheme, and the maximum revenue approved tax free cash entitlement.

• The benefits of investing in a Last Minute AVC include:

• Receiving a refund of tax on pension contributions AND

• Maximising your tax-free cash lump sum at retirement.

• How do I know if I am eligible ?

• ANS: Following a brief consultation with a Mercer advisor we will establish the maximum tax rebate available. Your service, age and tax band are a few factors to consider.