Life Insurance in Ireland: De-mystifying an important topic.
What is Life Insurance? Why should I have it?
When looking at Life Insurance in Ireland lets start with a very simple question; what is Life Insurance?
Life Insurance is an insurance Policy that pays out a lump sum (or income) when you die.
“But why does anyone need a lump sum if they die?” I hear you ask….and….
The answer is actually quite simple; we need life insurance because generally when we die our income stops. What happens to those who rely on our income for all the basics of life? (Food, Heating, Education Costs, etc, etc)
- Our Spouse/Partner
- Our Children
- Others we are caring for (aging parent perhaps?)
If you have family or others who would be financially affected if you died, you might want to consider getting some Life Insurance.
Key Point: Remember your most important asset is your ability to earn income.
How much Life Insurance do I need?
This will depend on a number of factors, such as:
- Your Income.
- Size of family.
- Age of children.
- Your budget.
Key Point: We recommend you speak to a Financial Advisor to help you determine the right level of cover for you and your family.
Types of Policies on offer (without the jargon!)
There are many types of policies on offer. Here are the main ones that people tend to take out.
- A Term Life Insurance policy will pay out a lump sum if you die during a specified term, for example 20 years.
- The lump sum stays at the same level throughout the term, but you could add an indexation clause to increase it over the term.
- The monthly cost of the policy is also fixed over the term, unless you add indexation.
- A Mortgage Protection policy is A LIFE INSURANCE POLICY, many people are confused by the term “Mortgage Protection”.
- A Mortgage Protection also pays out a Lump Sum if you die during a specified term, but this lump sum decreases each year.
- The policy usually starts when you take out a mortgage and the lump sum equals the amount you borrow.
- The annual decrease in Lump Sum is calculated to reflect the decreasing mortgage as you pay it back. In other words there should always be just enough to clear the mortgage if you die.
- The monthly cost of the policy is fixed over the term.
Whole of Life Cover:
- This is a Life Insurance policy which will pay out a lump sum on death, regardless of when you die.
- The lump sum can remain level or increase with indexation as above.
- The monthly cost is fixed for the term.
- In practice few people take out this type of policy due to cost; they can be expensive.
Key Point: Discuss with a Financial Advisor which type of policy is suitable for you.
Is Life Insurance Expensive?
- In general Life Assurance is not expensive compared to many other items. (A 40 year old could get €250,000 Life Cover for around €30 per month)
- Price will depend on amount of cover, your age, the term you need cover for and your medical history.
- Pre-existing medical conditions and lifestyle factors can affect the cost.
- Different Insurers offer different prices for Life Assurance.
Key Point: Ask a Financial Advisor to help you find the best price around.
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To Calculate how much Life Assurance you might need please click this link: https://osullivanfinancial.ie/life-cover-calculator/
For more financial advice – contact Donal during office hours on 087-2617495