What is Life Insurance?
Life Insurance pays a tax-free lump sum to your family when you die.
Maybe it’s a new arrival in the family that has prompted you to look into getting some life Insurance in place (if so congratulations!) or possibly you are already parents but without any cover in place, maybe your benefits from work have ceased, or possibly you’re simply looking to save money on an existing policy which you hold, either way you’ve come to the right place!
Why people take out life insurance
It is not easy to think about, but if something were to happen to you are you confident that your family will be able to meet all their financial commitments without you? Taking out life insurance can help avoid financial worries for your family at a time of emotional turmoil.
A life insurance plan can help protect your family:
- Pay off debt
The money can be used to pay off things like car loans, student loans, credit card balances and even the mortgage.
- Protect against losing an income
The money will help your family keep their standard of living, even though they no longer have your income, helping continue to pay towards childcare costs, bills and college fees
- Pay funeral costs
The average cost for a funeral in Ireland is over €4,000*. (*Source: The Journal 2016)
- Peace of Mind
By starting a life cover plan, you know that your family will be more financially secure if something happens to you.
We keep it very simple.
We quote you the absolute lowest premium we can offer first time and we think you’ll be very pleased with both the price and the standard of advice received. We pride ourselves on it. Life Insurance, also sometimes referred to as Term Life Cover, Life Assurance or indeed Life Cover is an insurance policy to provide a specified payment upon a death occurring within the term of the policy.
The term of the policy, that is the number of years it will run for is also specified at the outset.
You can also add Illness Cover to this type of plan which would pay all or a portion of the mortgage on the diagnoses of an illness covered by the plan.
For more information on Illness Cover please click here.
These are the essentials, but as I always say, you should not go ahead with any policy until speaking with an advisor to ensure it fits your requirements exactly. Feel free to give me a call on 01 539 44 50 for a quick chat. Ken.
The policy can be Single Life, which simply pays a claim on the death of the life assured, a Joint Life Policy which pays on the occurrence of the first death of either of the lives assured or a Dual Life Policy which can potentially pay out the sum assured twice where both deaths occur with the term of the policy.
With Dual cover, the policy can continue for the rest of the policy term in respect of the second life assured after the first death occurs. There are various additions that can be made a life cover policy with probably the most well-known being a ‘convertible option’. This can be a valuable benefit as it allows, for a slightly higher premium, the opportunity for the policy to converted into a new policy with a longer-term at any point. You will not be subject to any medical underwriting at that time. This can allow you to set a shorter term, only covering the period which you definitely know you will need cover but keep the option to extend if necessary. This can result in a lower premium being achieved. You can add Illness cover to a life policy, either on a ‘Standalone Basis’ or on an ‘Accelerated Basis’.
Where a standalone basis is chosen, the life cover and illness cover are independent of each other and where a claim occurs on the illness sum assured the full life cover sum assured will continue to stay in place for the remainder of the policy term. Where an ‘Accelerated Basis’ is chosen, the amount of life cover for the remainder of the term is reduced by the Illness payment in the event of a claim. This is a cheaper option and can be an ideal solution for a customer who requires both cover types but for whom cost is a major factor. It is important for those who require life cover to have the correct level of cover in place. Saying this, it is also important that you are not paying for life cover when you reach a stage in your life that your personal circumstances deem the cover unnecessary. If this is the case, we will be very clear in telling you that this is our belief.
- Single life cover means a lump-sum life cover payment is paid to your beneficiaries if you die within the term of the plan
- Joint life cover, which means two people are insured under the one policy but only one claim is paid out to the beneficiaries- usually on the death of the first person. The policy then ends when the first person dies; or
- Dual life cover also insures two people under the same policy, the difference however is that a claim can be paid out on both deaths. If one person dies, a claim is paid out and the policy continues in the name of the survivor. If the second person dies during the term of the policy, a second pay-out is made. For this reason, dual life cover can be more expensive than joint life cover.
Types of life insurance cover
There are two main types of life insurance:
Term Life Insurance: The simplest and cheapest type of policy lasting for a set term, e.g. 20 years. A claim can be made if you pass away within the term.
Whole of Life Assurance: This is typically a more expensive policy but if you pay your premiums, your dependants will get a lump sum when you die, regardless of when this occurs.
Types of Term Life Insurance
The type of term insurance you choose will affect the cost of your monthly premiums over the term.
Level Term: this insurance pays out a lump sum if you die within the specified term. So, for example if you take out a policy for a term of 20 years and you die within the 20 years your insurance company will pay out the sum insured. If you die outside of the term insurance for example after 25 years and your term insurance was for only 20 years, then the insurance lump sum will not be paid out. With this type of cover the sum insured and the premiums you pay does not change throughout the period, they remain level throughout the term of the policy, regardless of when you make a claim.
Decreasing Term: this type of term insurance is used to cover a debt that reduces over time, such as a mortgage. The amount you are covered for will decrease over the life of the policy. At the beginning of the process you choose the initial sum you would like insured and the term of the plan (number of years of cover). During the life of a decreasing term policy the sum assured reduces every month in gradual steps until is reached zero at the end of the term. A decreasing term life insurance policy would normally be used to cover a mortgage or other loan where the amount owed reduces each month as you make loan repayments, such as a repayment mortgage.
Decreasing Term cover ensures that the sum insured is tailored to just cover the loan and no more each month. Decreasing Term life Insurance quotes are cheaper than Level Term Assurance quotes.
Increasing term: Sometimes you can add benefits to your life insurance policy such as indexation or ‘inflation protection’. In this case, your level of cover (but also your premium) will rise by a fixed amount, usually 5% each year, to help keep up with inflation. This type of cover is sometimes called increasing term insurance as the level of cover is increasing each year.
This form of cover is only suitable in very limited circumstances, please speak to your QuoteLeader advisor for more details on the suitability of this type of cover for you.
The premium is calculated by reference to:
- the sum insured – the higher the value the higher the premium
- the length of the term of cover
- the age of the policy holder- the younger you are the cheaper the cover
- your health status and in some cases your medical history
- whether you are a smoker/non smoker
- whether your premiums are fixed, or index linked
If you’re in good health and you don’t smoke (smoking can double your premium price) Life Insurance is very affordable
Let’s look at an example.
Sheila is a 42 year-old married architect. She and her husband have two young children and she is considering Life Insurance to protect her family.
Sheila doesn’t smoke, and she in good health. She wants a 20-year term of €250,000, to cover her family until her children reach adulthood. Her quote would look like this:
( Ken to insert sample quote) That’s between €? a week for Life Insurance. For €2 extra a week, Sheila can get a conversion option as well. This would allow her to buy more cover when she is 60 without having to answer medical questions
- Life insurance can be used to describe policies that specify a set term. If you don’t die within the specified time period, then no claim can be made.
- Life assurance on the other hand is a whole of life cover, which means that a pay-out is guaranteed after your death at any stage in your life.
The requirement for a medical examination will depend on your health status at the time of requesting a life insurance policy. If you are in good health, then the answer is usually no. However, if you are over a certain age, have a history of illness or are applying for a large sum of cover then you may need to undergo a medical examination or complete an over-the-phone medical questionnaire. You do not have to worry about the cost of this as it will be organised and paid for by the life insurance company.
Your life insurance company may also have a medical questionnaire sent to your doctor for him or her to complete.
Please note however that in most cases cover is provided on the basis of the information included in the application form alone with no further medical requirements.
A very important part of the life insurance process is honest disclosure of medical circumstances when completing an application.
You must answer all other questions honestly.
There are some benefits that are automatically available to you, at no extra charge, when you take out Term Life Insurance.
These may include the following:
- Early payment if you are diagnosed with a terminal illness
A terminal illness is a condition that, in the opinion of the appropriate hospital consultant and the insurance company’s chief medical officer, meets both of the following:
- The illness has either no known cure or has progressed to a point where it cannot be cured
- The illness is expected to lead to your death within 12 months
- Accidental death benefit
This is a temporary automatic benefit available while you are in the process of taking out life cover. The insurance company pays death benefit (up to €150,000) if you die as a result of an accident.
This covers you from the time the insurance company receive your filled-in application form, until any one of the following happen:
- Your application is accepted
- You are offered special terms
- Your application is refused
- Your application is postponed
- 30 days have passed
This benefit is only applicable if you are younger than 55. Once you are accepted for life cover, this benefit will stop and your regular life cover starts.
- Children’s Life and Specified Illness Cover
If you take out life cover some insurance companies will automatically offer life cover to each of your children up to age 25 for as long as you are covered.
In addition, some insurance companies offer specified illness cover for children up to the age of 25 and are covered for the same illnesses you are covered for.
- Guaranteed Insurability
This benefit is available on both life and specified illness cover plans. If you start life cover and before the age of 55 you then get married, have a child, take out a new or extra mortgage or get an increase in salary, you can ask your insurance company to set up a new life cover plan
You won’t however have to provide any information about your health.
Please see the terms and conditions booklet for your policy for detailed information
In addition to these free additional benefits you can pay extra to add any of the other benefits listed below
- Specified illness cover is a benefit that can be added to your life insurance policy. See here for more information on what this is. ( note to webdeveloper to include link to serious illness page)
- Conversion option is another common benefit that can be added at an additional cost. This allows you to extend the term of your cover at any point over the course of your policy without having to take a medical examination or answer any questions about your health, regardless of your age or health status. Convertible premiums are usually more expensive than non-convertible premiums.
- Inflation Protection (Indexation) This option allows you to increase your cover every year (to keep in line with the cost of living). You will not have to provide evidence of your health. This is often called ‘indexation’.
This option protects the real value of your cover as time passes. If you do not take this option, your cover will stay the same throughout the term of your plan.
How inflation protection works
You will have to pay an extra charge for this benefit. This extra charge will depend on your age and the term of your plan.
At QuoteLeader we know it can be difficult to decide what type of life cover best suits your needs. To make sure you choose the right plan for you and your family we will discuss your individual circumstances to ensure you select the right type of cover.
The following factors can help you decide which life insurance plan works best for you and they’ll be considered when you get a quote.
- Your age: the older you get, the more expensive the policy.
- Your monthly income: how much can you afford to pay?
- The ages of your children: how long will you need to support them?
- Homeownership: how much mortgage debt is outstanding?
- Health and lifestyle: do you smoke or suffer a life-limiting illness?
- Amount of pay-out: how much money do you want to leave your family?
At Quoteleader.ie we can help you work out how much life cover is appropriate to suit your needs. For example, you may need enough cover to:
- pay off your mortgage
- pay childcare costs
- pay college fees
- pay household bills and credit cards
- provide for dependents until they reach adulthood
This will depend on what you want to get out of your Life Insurance policy and your monthly budget for the premium.
If you want to leave behind a large sum of money for your grown-up kids, Whole of Life is a good option or Term Cover with a conversion option. This is typically more expensive.
If on the other hand you want to protect your family while your kids are young, then we would recommend a go with Term Cover. This is also a cheaper option compared to Whole of Life Cover.
The maximum term is 50 years or up to age 85, whichever is earlier (some benefits end earlier than age 85).
You cannot cash in a Term Life Insurance plan, it is not a savings plan.
There are many providers who sell life insurance in Ireland including
- Irish Life
- New Ireland
- Royal London
- Aviva Group Services Ireland is a private company limited by shares.
- They are registered in Ireland No.322579.
- Aviva have 33 million customers worldwide.
- Aviva pay out each year €34.6 billion in claims and benefits to their customers across all their markets.
- Have over 300 years of heritage.
- Regulated by the Central Bank of Ireland.
- Irish Life Assurance plc is a subsidiary of the Irish Life Group Ltd and is one of Ireland’s leading life and pensions companies with over 1.3 million customers.
- Irish Life has operated in Ireland for over 80 years
- They are registered in Ireland No. 152576.
- Irish Life Assurance plc is regulated by the Central Bank of Ireland.
- The first wholly Irish owned life assurance company to transact business in Ireland.
- New Ireland Assurance Company plc is regulated by the Central Bank of Ireland.
- A member of Bank of Ireland Group.
- Have over 560,000 customer contracts
- funds under management of over €18.2 billion (December 2019)
- Based in Dublin, Royal London is a fully owned subsidiary of The Royal London Mutual Society Limited, the largest mutual life, pensions and investment company in the UK.
- Royal London is authorised by the Central Bank of Ireland and provide protection products through Financial Brokers across Ireland.
- Royal London Insurance is registered in Ireland, number 630146
- Acquired Caledonian Life in 2011
- Group funds under management of €164.3 billion ( as at June 2020)
- Zurich Insurance plc is regulated by the Central Bank of Ireland.
- Zurich Insurance plc is registered in Ireland under registration no. 13460.
- Responsible for funds under management of approximately €26.9 billion, of which pension assets amount to €15.7 billion (as at 31 December 2020).
- Operating in Ireland for 40 years
In short there is no ‘best’ Life Insurance as it all depends on your individual situation. Life Insurance comes with different extras/benefits which will influence your decision. Therefore while the cost is a consideration, you should also keep in mind the benefits offered by each of the Irish insurance providers you choose from. At QuoteLeader we will listen to your unique circumstances to ensure you select the best life insurance for your needs.
Yes, you can change your level of cover or switch from your existing provider. At Quoteleader we believe it is worth reviewing your policy periodically because life circumstances change and therefore monthly premiums could possibly change in line with this. Contact us as Quoteleader and we will shop around for you to help you find a better deal.
What are the benefits of taking our life cover with Quoteleader
- We ensure you get the cover that best suits your needs
- Best value quotes on the market
- Professional advise
- Digital signatures
- Fast turnaround