Life insurance in Ireland is a tricky business. If you are a first-time buyer of life insurance cover you can quickly get bogged down in the details, with too many questions and only a few answers.

  • Do I need cover?
  • What is the best cover for me?
  • Why is there such a difference between life insurance quotes?
  • Are all providers the same?

No doubt there are many more questions but let’s try get a few answers to make your choices easier.

When looking for life cover you need to know exactly what you need. Not having the right life insurance policy can cost you dearly, just when you need it. What may be perfect for your neighbour may not suit you, but looking around, knowing the facts and focusing on what you need will get you over the line.

What is life insurance cover?

Life insurance cover is a policy that will pay out a specified lump sum in the case of the insured’s death. If life insurance was this easy, we could all go home now and not worry about it again. Unfortunately there are variations in quotes, policy, benefits and terms and conditions, which more than confuse matters.

Why get quotes from different companies?

You have only one life, but why do life cover companies differ so much in policy costs? Irish Life Financial Services may be looking for €99.00 per month, while Zurich Life could charge €129. €30 per month over a year could pay your car insurance, if you are lucky. Sometimes a basic policy is all you need, and paying too much can cost you dearly.

Your existing insurance company could take you for granted and not give a good quote. Often when shopping around you may find the perfect deal for a new customer. Don’t be afraid to look at what other companies offer; it can be to your benefit.

Take a good look at policy details

The devil is in the detail and this is very true with life insurance. A non-smoker will find better value when looking for cover, as life expectancy is higher. If you once smoked though, even 20 years ago, it could affect the pay-out in the case of your death. It is best to be sure, so ask.

Other questions are not so pleasant but still need to be asked.

Does life insurance pay for suicidal death in Ireland?

A question nobody ever wants to be in a position to face. In truth many people need to ask it each year and possibly more so in recent times. Don’t be afraid to ask your insurance provider any awkward questions, as they could very well affect you at some stage.

Suicide is a tragic event. If you take your life by your own means, at least let there be a benefit to it. A life insurance policy usually does not include a condition excluding suicide. What it will include is a refusal to pay out within the first twelve months of starting the policy. If you die by suicide after the first year, your life insurance pays out in line with the policy conditions.

How about lifestyle or serious illness cover?

Take a look at the policy details here with great caution. Life insurance obviously covers for death from serious illness, but how does it work in reality? Are there any clauses covering your death from an accident when doing an extreme sport? Some companies may exclude cover if you take up sky diving, for example. Check with your broker before doing anything too dangerous.

Medical matters

When taking out life insurance you will be asked to answer a few questions about your health. Answering no to most of the queries usually gives you fairly immediate cover at a good price. If you fail to declare a heart condition, for example, and then die from coronary complications, your policy may be questioned. Some insurance companies may examine your lifestyle too, in these circumstances, so it pays to be fully honest from day one.

The last thing you want for your loved ones is problems with life insurance on your death.

Is the claims process straightforward?

While not exactly a policy detail, the end result of a straightforward policy pay-out depends on the small print. If a life insurance plan has many terms and conditions, then take a step back. Always get independent advice if you see too many red flags.

Central Bank of Ireland regulations cover all possibilities for your insurance company. If your life insurance provider is not approved, then walk away. Problems that have been known to arise include unreasonable, hidden clauses and even an inability to pay. The Central Bank vets all life insurance providers and keeps them on the straight and narrow.

Life insurance questions worth asking

While the immediate cost of a life insurance plan is not expensive, it can add up over time. If you are not properly covered or expect more from a policy, you could be making a costly mistake. The time for reassurance is before taking out a life insurance policy, not when it is needed.

Let’s take a look at a few common questions and answers.

Is the sum insured tax free?

In Ireland, the beneficiary of a life insurance policy will receive a tax free lump sum. Inheritance tax may be due by some beneficiaries of the life insurance policy, depending on their relationship to you. Irish law may have a say here too, and this grey area is worth a look when taking out a policy.

Are life insurance and life assurance the same?

In a word, no. Life insurance is for a fixed term and cover will cease after 10, 20 or 30 years. Fixed term life insurance, as it is known in Ireland, is often taken out with bank loans and for mortgages. Some parents take term life insurance out when a baby is born. They want to know that if they die before the child turns 20, there will be financial support in place.

Life assurance is for life and a policy will cover you from the day you take it out to the day you die. It is also known as whole-of-life insurance and pays out a lump sum on your death. Premium costs are higher with life assurance but shop around for better quotes.

How about that tax free lump sum?

You obviously want loved ones to benefit in the case of your untimely death. How much is the question and can life insurance policies differ greatly here? Yes they can is the simple answer, and there can be quite the difference.

If you are the primary income earner your salary will be greatly missed. Guidelines suggest aiming at a lump sum figure of at least four times your current salary. Other factors worth considering are the number of children you have and their living costs. Household bills, child care and even future college fees will also need covering in the event of your passing.

Having cover that you can afford but that also looks after your family financially is very important.

Can I add extras to a life insurance policy?

You should be able to add extras but ask your broker about this before signing along the dotted line. Life cover you take out at 25 may not be suitable when you reach 32 and start raising a family.

Specified illness cover

Maybe there is a history of heart disease or similar in the family? An extra, such as specified illness cover can come into play here. Adding it to your policy may not incur much additional cost, but it will increase your lump sum.

Indexation

Inflation is a huge news story at the moment and for a good reason. High inflation eats into the value of lump sum pay-out. Indexation is a life insurance extra that keeps any pay-out in line with inflation increases.

Convertible term cover

Convertible term cover allows you to add to the term of your life insurance plan. The beauty of having this extra is that you will need not undergo a medical examination, and is easy to activate.

There are many extras worth considering when comparing life insurance quotes.

Mortgage protection and income protection

Life insurance is not the same as mortgage protection insurance or income protection insurance. There are a few common areas and uses, but be careful when comparing policies and quotes.

Mortgage protection covers that lovely big mortgage you take out when buying a home. In the event of your death, the mortgage protection policy will pay off the balance of your mortgage. There will not be a lump sum for the family left behind, but they will get a roof over their heads.

Income protection, on the other hand, will cover your salary in the case of you being unable to work. A policy will offer a level of financial protection but is not in any way a substitute for any life insurance benefits.

Life insurance and your mortgage

Life insurance pays out in the case of your death. Any beneficiaries will need to sort mortgage payments or family cost of living expenses. If your life insurance pays out enough, it may be taken by the bank to cover a mortgage, but it is advisable to arrange a separate life insurance quote.

The need to compare life insurance quotes

Never, ever go with the first policy you find online or is offered by a broker. The monthly premiums may be good, but not all life insurance plans are the same. As you can read here, life cover benefits can vary drastically and you do not want your loved ones left holding the pieces.

Life insurance is serious

Mortgage cover, financial protection and monthly income can depend on the life insured. If you pass away without the right life cover, your family could be in serious financial straits. Life insurance is serious, so take it seriously.

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We know about life insurance in Ireland. Our experts can talk you through all the terms, small print and expected benefits. Do not leave any decisions to chance. Call us today and get the best of independent life insurance advice.

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