Most Common Types of Life Insurance in Ireland

The decision to take out a life insurance policy is very important with the reason being that a life insurance policy ensures that dependents of the policyholder are paid out should he/she die while it’s in place. In short, a life insurance policy pays out a lump sum on your death, which can offer financial reassurance and assistance to loved ones in this unfortunate event. The cost of life cover depends on the benefits you want, but other factors like your age, gender, state of health and lifestyle are also very important factors that may affect your premium. If you have a dependent family, a life insurance policy should really be considered a necessity, as you don’t want your family to have to endure financial hardship during what will already be a very testing time in their lives.

When trying to choose a life insurance policy, it is important to shop around. The more channels you check out, the more likely you are to find a competitive quote. You’ll be offered the option of several different types of life insurance policies depending on your circumstances. To make the process of choosing the right cover a little easier, the following is a breakdown of the most common types of life insurance policies in Ireland:

Term Life Insurance

This is the most common and one of cheapest types of life insurance policies. You simply choose the period of time that you want cover for – be it 10 years, 20 years or more – and the amount of cover you wish to have paid out in the event of your death (an assured lump sum figure). The higher the amount of assured cover, the higher the monthly premium. In the event that you don’t die within the term period, you’ll simply be paid out the assured sum. In the event of terminal illness, you can apply for 80% of the assured sum to be paid out, with the remaining 20% paid to dependants on proof of your death. Term life insurance will not be paid out in the event of a suicide or death that’s caused by an illness that you had before taking out the policy and had not declared.

Whole Life Insurance

Whole-of-life insurance policies are not taken out for any fixed term, and as a result the premium is not fixed. A whole-of-life insurance policy is designed to financially protect your dependents should you die at any time. It is therefore a more expensive option than term life insurance. Whole life insurance may prove a more attractive option for those looking for long-term life insurance protection.

Mortgage Protection

Mortgage protection insurance pays out a lump sum to pay off your mortgage to a lender in the event that you die. Mortgage protection insurance will run for the same length as your mortgage term. If you die, your dependants will not receive a lump sum, your mortgage will just be paid off. Although it may seem like this is not directly beneficial for your family members, having this policy can take away a huge financial burden from them and you can rest assured that your family will still have a roof over their heads if you pass. Typically, as the years pass by and the remaining amount of your mortgage decreases, so too does the amount of your mortgage protection insurance premium.

We hope this guide helps you better understand the types of life insurance policies available to you. As previously mentioned, be sure to shop around and consult a financial advisor to ensure that you get the best policy for you and your family.

How often should I review my life insurance policy?

The general rule of thumb, no matter what kind of life insurance policy that you have got taken out, is that it should be reviewed every 12 months. Any reputable financial advisor will advise you to review your full life insurance policy and consider any relevant changes in your life that have occurred over that previous year. Additionally, the cost of life insurance premiums are consistently going down, as much as 40% in some cases, so you need to ensure that you review the cost of your life insurance premiums and shop around to make sure you are availing of the best rates.

Reviewing your policy every 12 months is standard, but there are certain instances where you should review and amend your policy immediately too.

These include:

Major Life Events

Should you get married or should your relationship break down, you may need to review the beneficiaries that are listed on your life insurance policy. A major life event may also include the birth of a child or grandchild. You may want to reassess your beneficiaries to include the new arrival or increase the value of your life insurance policy. The death of a loved one is another major life event that may present cause for you to immediately review your life insurance policy.

Financial Windfall

Have you struck lucky and experienced a financial windfall? If you have come into a substantial amount of cash, whether through a lottery win or an inheritance, you’ll need to review your life insurance policy as your worth will have increased. If you are a business owner whose business has taken off and you are now in a much more profitable state, you should also consider speaking to a financial advisor and updating your life insurance policy as the value of your assets may have grown significantly.

Ill Health

Should you be diagnosed with a serious medical condition or experience ailing health, both of these situations call for a sit down and re-evaluation. You should consult a financial advisor about drafting in additional criteria to your life insurance policy in light of your ailing health. Being diagnosed with a serious health condition can be a distressing time and reviewing your life insurance policy may be the last thing on your mind, but it is important if you want to effectively safeguard the future of your family.

Having taken all of the above on board, take a quick moment to think about when the last time was that you reviewed your own life insurance policy. If it has been 12 months or longer, it’s time to be proactive and schedule a meeting to review your current policy and make any adjustments that need to be made.

Once you have this over with, make it a recurring appointment to ensure that you don’t let things slide again. By doing this, you’re giving yourself the best chance of getting the best possible rates and you’re actively ensuring that your policy is 100% relevant and effective in doing what you need it to do.

What Type Of Life Insurance Do I Need?

When it comes to buying life insurance the number of different options available can seem

pretty overwhelming. It’s is an important decision and one you certainly don’t want to get

wrong but generally life insurance policies can be boiled down to a few basic categories.

Mortgage Protection

Mortgage protection does what it sounds like. It protects against the loss or inability to pay

a mortgage. Typically this means that upon the death of the person paying the mortgage the

rest of the mortgage is paid off.

Do you need it?

Obviously you only need mortgage protection if you are taking out a mortgage. Generally

banks require you to have mortgage protection insurance in place before they will provide

you with a mortgage. They will often provide you with or recommend their own policy.

You should of course look at other options. Beyond simply checking that their product is the

best value there are a few other factors to consider. For instance, the bank’s policy will likely

only cover you while your mortgage is with them. This may cause problems if you find a

better mortgage and decide to switch or if you move home altogether.

Life Insurance

There are two main types of life insurance you are likely to come across, term and

guaranteed. Both pay out in the event of your death but term only pays out if you die within

the period specified. Guaranteed insurance pays out no matter when you die.

Do you need it?

On the face of it guaranteed insurance sounds like the better deal but term insurance is the

much more practical insurance that most people rely on. The main reason to get term

insurance is to protect your family. A policy is typically set up to pay out should you pass

away before your children are old enough to support themselves.

Reviewing the policy every number of years allows you to get better rates early on as rates

are based on your life expectancy. Guaranteed life insurance is more expensive since it pays

out regardless of age or health. It may be used if a person cannot obtain term insurance due

to health complications or age.

If you have a young family or are planning on starting a family you should certainly be

looking at getting term insurance. If you are concerned about leaving adult children with

excessive bills on your passing then guaranteed life insurance is potentially more suitable.

Income Protection

Income protection guarantees the continued payment of a portion of your income, typically

75%, should you become ill or otherwise unable to work. It is not designed to cover

redundancy.

Do you need it?

Self employed persons are particularly vulnerable to loss of income as a result of illness. The

state does not provide them with illness benefits and they do not have sick leave provided

by an employer. Employees can get state benefits, however they are very small and

therefore unlikely to allow them to sustain their quality of life.

Over 50’s Insurance

A form of guaranteed life insurance, Over 50’s insurance is specifically designed for the over

50’s to leave a lump sum to their next of kin on their passing.

Do you need it?

There are a number of benefits to an Over 50’s policy. There are no medical requirements to

access the policy. Payments are fixed for the duration of the policy and determined by your

age when you take it up. Payments cease after a certain point, usually your 90th birthday,

but the cover remains however long you live.

5 Tips On Buying Life Insurance

5 Tips On Buying Life Insurance

Everyone understands the importance of life insurance to provide for your family but the

sheer variety of providers, plans, policies and prices can be overwhelming to say the least. It

can take a lot of work to find the right policy for you and your family but it should be worth

it in the end. Here are 5 tips to keep in mind when looking for life insurance to help you

make the best decision.

Remember the Home-Maker

Buying life insurance is a very pragmatic affair. As a result we often factor in only specific

figures. For the most part that means the particular salary of the primary income. Because it

is not so easily quantified the work of the primary home-maker tends to be undervalued or

forgotten about completely.

In the event of the death of the primary home-maker there is likely to be a substantial cost

in terms of replacing that work. Adequately insuring the home-maker prevents the financial

burden of that loss from adding to the family’s grief.

Understand What you Already Have

Because there are so many policies and such a variety it is sometimes possible to buy

insurance for something you are already covered for, at least partially, either on a different

policy or through work.

Some employers may provide certain illness benefits as part of their health insurance plan

or your existing term insurance may be able to cover a portion of mortgage payments. Make

sure you understand what coverage you already have before you buy a product. Equally,

don’t assume that an existing policy covers everything you need from a new one.

Understand Guaranteed vs Term

Term insurance is the more common type of life insurance we take to ensure our families

are taken care of in the event of our passing. It only covers for a specified period or term

before it is reviewed. This allows for adjusting the policy to reflect increased income and

cost of living standards of your family but will also factor in increased aged and changes in

health. Terms mean you can insure your young family is taken care of but that you do not

continue to pay for coverage when children are grown and independent.

Guaranteed or permanent insurance is fixed coverage for your whole life and so pays out

regardless of when your death occurs. Because the coverage is broader, premiums are

generally higher than term insurance.

Buy Insurance not an Investment

Remember that life insurance is about security and peace of mind for your family. Some

policies such as guaranteed life insurance have savings components that allow you to

withdraw certain amounts after a period but they typically require higher premiums as a

result. It is best to ensure that your core life insurance needs are met before spending

additional savings on investments.

Shop Around

As with any significant purchase you should always compare different offers from different

providers. Always be sure that you are comparing like with like. Two policies may look the

same but may be quite different in detail.

Always do your homework when shopping around. Make sure you understand what your

needs are and how much you can afford and if a policy fits those requirements.