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1. Answer c) The mortgage is a joint commitment. Both Ciaran and Penelope contribute to the family home and the fact that Penelope is not the leading earner and her commitment is partly one of time doesn’t mean that it’s any less valuable.
2. Answer b) Remember we’re looking at priorities. There’s an
argument that you can’t have too much insurance cover. Therefore, if
cost were no object, answer c might be the best choice. However, Ciaran
and
Penelope have a limited budget and the main priority is to
protect them against the possibility that Penelope might not be able to
play her full and vital part in their family. Ciaran already has
protection in that he would continue to be paid most of his income if he
were unable to work because of long term sickness or disability.
3. Answer a) Redundancy insurance is designed specifically to protect against loss of earnings, and it’s Ciaran who has the higher level of earnings that is important to protect. It’s unlikely that Penelope would be able to get cover for her part time job. However, redundancy insurance is expensive and, in practice, Ciaran and Penelope would need to balance the risk of Ciaran being unemployed for any significant period against the cost of redundancy insurance
4. Answer c) All of these precautions are desirable and, in some cases, important. However, from a protection standpoint, it’s having some easily accessible money, available to use at any time, which should be the top priority. The children are financially important at this stage because of their cost rather than their benefit, which is all in the future. Accident cover is a “nice to have” but is an addition to other ill health or disability cover rather than an end unto itself. Reducing debt is always beneficial but this should be a long term aim rather than an immediate priority provided.
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