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 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.