Life Insurance is a necessary evil. Life cover.
Well, maybe ‘evil’ is a bit of a stretch – but the idea of paying an insurer so your family isn’t left in financial ruins if you die is a bit…evil?
Less evil than a weevil but more evil than Knieval?
Which is why you’re on this page.
Don’t worry if you know diddly about Life Insurance…or Evel Knievel.
That’s why I’m here – to explain the ins and out of a sometimes-confusing concept.
Alternatively, if you dread the thoughts of spending the next few hours/days/weeks researching Life Insurance and you’d prefer me to do it for you in minutes, complete this questionnaire or call me on 057 9320836 and I’ll be back to you with a recommendation. Easy peasy lemon squeezy.
Let’s start with an obvious one: the types of Life Insurance you can get in Ireland.
Answer: It leaves money to take care of your family.
Basically, the insurer pays a tax-free sum to your family on your death. It can either be paid out in a lump sum or monthly.
Your family can use the money to replace your income, pay the bills and continue to live as you would have wished.
The Life Insurance pay-out is tax-free. But those who inherit it may have to pay inheritance tax. How much tax you pay depends on how much you inherit and Revenue rules at the time of your death.
That’s the disclaimer out of the way.
Life Insurance roughly breaks into two types:
Whole of Life
Answer: It leaves a lump sum whenever you die.
Whole of Life assurance will pay a cash lump sum whenever you die, as long as you continue to pay the premium.
You can’t outlive Whole of Life cover which makes it ideal for funeral expenses or to leave as a gift.
You’re covered from the day your policy issues and there’s no waiting period, which is pretty nifty.
There are two types of Whole of Life:
Guaranteed Whole of Life.
Reviewable Whole of Life.
Guaranteed Whole of Life covers you for your whole life presuming you keep paying your premiums. It’s also fixed, so the price can’t change.
With Reviewable Whole of Life, the big difference is that it can be reviewed every 10 years up until you’re 60 – which leads to big price hikes. It’s a trap so AVOID IT at all costs.
Pro-tip: There is also special type of cover called Section 72 Whole of Life assurance. Pay-outs are not subject to tax if used to pay inheritance tax. Did you know the most you can leave to your child tax-free is €310,000?
They will have to pay 33% inheritance tax on the balance unless you have a S72 Life Insurance policy in place.
As we can’t quote online for Whole of Life cover, please fill in the short form at the bottom of this page or call me on 05793 20836 for a quote.
Term Life Cover
Term Life ultimately does what it says on the tin: it covers you for a certain term e.g. 35 years. Once the Term is over, you’re no longer covered. However, most insurers offer a conversion option, which you should add to your policy.
It means you can extend your policy in the future without having to provide additional medical information – think of it as guaranteeing you cover even if you suffer a health scare in the future.
Now, if you’re older or you have serious health issues, there is another type of Life Insurance you should know about:
Over 50s No Medical Life Cover
Question: What does No Medical Life Cover do?
Answer: It guarantees Life Insurance for everyone regardless of health.
Anyone over 50 can get this type of cover regardless of their health.
There are no medical questions; you just need to sign an application form to get immediate cover.
As there are no medical questions, the price of this cover is higher than Term or Whole of Life.
NB: If you die (other than by accidental death) within the first two years, you’ll only get back what you paid in. After two years it becomes a traditional Whole of Life policy.
The insurers don’t allow us to quote online for No Medical Life Cover, so use the “get in touch” form at the bottom of this page or call me on 05793 20836 and I can get cracking.
That’s an overview of the main types of Life Insurance, though there are a couple more insurances that you’ll likely come across – and that are equally useful when it comes to protecting your life.
Question: What does Mortgage Protection do?
Mortgage Protection clears the remaining balance on your mortgage if you die. It’s the cheapest type of Life Insurance you can buy.
If you’re getting a mortgage on a residential home, you need Mortgage Protection. (Where ‘need’ means ‘legally have to get it’.)
But you don’t have to buy it from your bank.
Imagine, in a few years’ time, you find a better mortgage deal at a different bank.
You decide to switch your mortgage to the new bank. What will happen to your current Mortgage Protection policy?
Your bank will cancel your policy as soon as you move to the new lender, forcing you to apply all over again for a new policy.
What if you can’t get a new policy in the future? You’ll be stuck paying your expensive mortgage.
But, if you had the good sense to buy from a broker, you can bring your policy with you.
Buy direct from a bank – it’s non-transferable i.e. your policy ends when you switch to a new bank.
Buy from a broker – the policy is yours and you can transfer it to the new mortgage.
Want to know more about Mortgage Protection insurance? Check out our ultimate guide to Mortgage Protection.
Question: What does Specified Illness Cover do?
Answer: It pays you a cash lump sum if you get one of the specified/serious/critical illnesses outlined in your policy.
This is also known as Serious Illness Cover or Critical Illness Cover.
Mortgage Protection and life cover pay-out when you’re gone. But with Specified Illness Cover you’ll get to use the money while you’re still here.
You could use the pay-out to cover your day-to-day expenses and medical bills while you’re out of work. So you can focus on getting better without worrying about money.
Life Insurance takes care of your family; Serious Illness Cover takes care of you.
Be careful when buying Serious Illness Cover. The most important thing is not the amount of illnesses covered by the insurer but how easy it is to make a claim. Make sure you understand why it’s easier to make a claim with one insurer over all the others.
You don’t need loads of Serious Illness Cover.
Question: What does Income Protection do?
Answer: It pays you an income for as long as you’re unable to work.
Also known as Permanent Health Insurance, it pays you up to 75 percent of your annual salary should you be unable to work due to ANY illness, injury or disability.
You need Income Protection if you’re the main breadwinner or self-employed.
In the nicest way possible, you’re a lunatic if you’re self-employed and don’t have Income Protection. Takings risks is part of being self-employed but not having Income Protection is daft. You’ll get nowt from the government if you’re out of work. Not a sausage.
How long could your family cope if your income stopped for an extended period of time?
Income Protection has a lot of booby traps. Don’t buy it before taking professional, independent advice from a broker who deals with all 5 providers. (Aviva, Friends First, Irish Life, New Ireland and Royal London).
Why get life insurance
The real importance of Income Protection lies in the rehabilitation and retraining benefits on offer at some of the insurers.
Sure, you may think it would be great to have a few months off and get paid, but believe me, you’ll be itching to get back to some sort of work sooner than you think. Some insurers are better than others at getting you back on your feet, so that’s a major plus point in their favour.
Types of Life Insurance – no one-size-fits-all approach
As you can see, there’s no one-size-fits-all approach when it comes to Life Insurance.
I’m married with three young kids, self-employed and have a Celtic Tiger mortgage so I’m insured up to my oxters with:
Your situation is different so you need different cover.
It’s hard to pick the perfect policy from all the different types of Life Insurance available – especially doing it on your own.
At Lion, we’re the Life Insurance experts. Our job is to help you just like we’ve helped many others.
We’ll get you the most suitable cover at the best price – saving you time, money and hassle. I’m an independent advisor which means I know the good and the bad about all the Life Insurance providers.
Unlike the banks or other insurers, I work with all six insurers so can get you the best deal. The insurers are:
Our commission structure:
Which insurers we placed our business with:
We’re the only broker who shares this data because we’re trying to be as transparent as possible. Unfortunately Life Insurance is associated with sleazy selling and sneaky shenanigans.
Our mission is to change that perception and to make Life Insurance accessible for everyone.
Over to you…
I hope that has helped clear up the different types of Life Insurance.
If you’d like to discuss your own needs in more detail, please get in touch.
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