Q I am 74 years old and pay €198 a month on a single life policy that is worth €157,000 for death or disability (non-indexed). I have seen the cash value drop from €21,000 to the current €9,000. Should I collect it or continue paying the monthly installments?
AN It sounds like the policy he has is called a unit-linked whole life policy, said Richard Jones of Aviva Life and Pensions. This means that the policy will pay (assuming the required premiums continue to be paid) the full amount of €157,000 on your death.
This type of policy is often more expensive than other term life coverage policies that are available due to the guaranteed payout upon death. However, this policy may be subject to what is called a policy review.
This means that premium increases may be necessary to maintain the benefit level at €157,000. In answer to his question about whether or not he should get paid, there are a number of factors he needs to take into account, such as his overall financial position, his age and his health, Mr. Jones said.
The value of your policy may have decreased due to a number of factors, including the type of fund in which it is invested, the return received from this fund and the level of fees associated with your policy, Mr. Jones said.
On that basis, I would recommend that you speak to an independent financial broker who will be able to complete a full financial check with you and explain the options available to you.
Q I read recently that the Irish Credit Bureau is planning to go out of business at the end of the year. Is this true? Will it mean that my credit history will be deleted?
AN You are correct that the Irish Credit Bureau (ICB) recently announced its plans to go out of business at the end of the year. However, this doesn’t mean your own personal credit history will go away, according to Frank Conway, founder of financial wellness provider MoneyWhizz and a qualified financial advisor.
This is because the ICB has not been the only provider of personal credit information in Ireland for a number of years. In addition to the ICB, there is also the Central Credit Registry, or CCR for short. The CCR was established several years ago and has become the leading credit reporting authority for personal credit use.
Today, it is the main place lenders go to check the creditworthiness of those who apply for credit. Therefore, your personal credit history will remain accessible under the CCR.
If you have a loan, a mortgage, a PCP (personal contract plan), or even a small business loan, you will still be reported and available for what is known in the industry as a “permitted purpose.”
In other words, whether or not you are a good credit risk. Also, keep in mind that you can currently request a copy of your own personal credit report if you want to see it, Conway said. Plus, you can get that copy for free every year. It could be a useful exercise in making sure what is being reported about you is accurate.
Q My four brothers and I inherited the house from my mother when she died in 2017. At the time the house was valued at €260,000. When we sold it two years later it sold for €275,000. Do we have to pay tax on the difference between €260,000 and €275,000 and, if so, how do we go about paying that individually?
AN Capital gains tax (CGT) may arise as you and your siblings have earned €15,000 since inheriting the house, according to lawyer Susan Murphy of MakeMyWill.ie.
However, you can deduct expenses you’ve incurred, such as legal and auctioneer fees for the sale, he said. The first €1,270 of your share of the taxable profit is also exempt from CGT. The rest is taxed at 33pc.
You can each file your CGT returns separately on Revenue.ie, but be aware that if the property was sold in 2019 you may have to pay a late payment penalty and interest.
Q I have three defined contribution pension accounts, what do I do?
AN If the amounts are low, for example if you took out 25% of the lump sum tax-free and the combined value was less than €20,000, you could take the remaining amount in cash and only pay 10% tax, says Mr. . Conway from MoneyWhiz.