How to choose a life insurance policy in Ireland
Ensuring your loved ones are cared for when you die is a concern, but life insurance can ease the financial worry. Here’s how life cover can financially protect your family and how to choose the best policy for peace of mind.
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What is life insurance?
It’s a policy which guarantees a sum of money to named beneficiaries when the policyholder passes away in exchange for premiums paid during the term.
Life insurance is a contract between insurer and the policyholder that pays a tax-free sum in the event of death but does not cover serious illness or disability.
How life insurance works
You’ll pay a monthly or annual premium and, if you die, your partner or family will benefit from financial support. The amount of money they receive will depend on the sum insured.
You can decide how much you want as a payout for your loved ones, and whether you want cover for a fixed term or your whole lifetime.
What age should you get life insurance?
Life insurance is cheaper when you’re younger because premiums are calculated on the basis of risk, so the sooner you get cover the better. For example, if you’re 50 and a smoker, your premiums will be higher than if you were a 25-year-old non-smoker.
Some life insurers may cover seniors, although typically, the age limit is around 75 years, and it gets more expensive, the older you get.
Types of life insurance cover
Term Life Insurance
The simplest and cheapest type of policy. It lasts for a set term, e.g. 20 years, and a payout is guaranteed if you pass away within the term.
Whole of Life Insurance
This payment guarantee will last your lifetime, but it’s more expensive. As long as you pay your premiums, your dependents will get a sum when you die.
Levels of term life insurance
The type of term insurance you choose will affect the cost of your monthly premiums over the term.
Can you change your existing life insurance policy?
Yes, you can change your level of cover or switch provider.
It is worth reviewing your policy periodically because life circumstances change. However, remember that premiums will rise as you get older. Your existing cover may work out cheaper than any new policy.
If you need to change it, you can either:
- ask your insurer to alter your policy
- cancel your policy and shop around for another
To switch to a new insurer, you will need to complete a new life insurance application form.
What is the difference between life insurance and life assurance?
Life insurance is mainly used to describe policies that specify a set term. If you don’t die within the specified time period, then a claim can’t be made. Life assurance is ‘whole of life cover’, which means that a payout is guaranteed after your death at any stage in your life.
Other types of financial protection
Life insurers often offer other types of financial protection that may be more suitable for your circumstances.
- Serious illness cover: This pays a lump sum on diagnosis of a specified illness, including cancer, heart attacks, kidney failure, or dementia. The severity of illness may affect the payout.
- Income protection insurance: This provides an income if you are unable to work due to illness or disability. The protection income is based on a percentage of your earnings and will contain a ‘deferral period’.
- Mortgage protection insurance: This type of insurance is usually required by your mortgage lender and will cover mortgage repayments if you pass away.
- Over 50’s cover: This product is specifically for people over 50 to pass on a tax-free lump sum and is whole of life cover. Medical underwriting isn’t needed for this type of insurance.
Life insurance benefits
A standard life insurance policy will only guarantee payment if you pass away; however, some life insurers may offer optional benefits to your policy, including:
Policy exclusions and restrictions can be buried away in the small print so check the terms and conditions carefully.
How much does life insurance cost in Ireland?
The cost of your life insurance depends on:
- Your age
- Your health
- Your lifestyle
- The sum insured
- The term
For example, €400,000 sum assured and a term of 25 years, premiums could be around €20 per month for a non-smoker in their 20s or over €200 per month for a 50-year-old smoker. Source: Zurich Life Insurance Calculator, August 2024
What about indexation?
Indexation is an option that you can choose to increase your life cover in line with inflation.
This means that the cost of your policy will go up each year along with your benefit, but this will increase at a lower rate. For example, a 2% increase in your premiums will result in a 1% increase in your benefit.
Choosing the right type of life insurance cover
The best life insurance policy is tailored to your family’s needs and protects their financial well-being at an affordable price.
It’s useful to shop around and get quotes to find out what you can afford and what you need to cover before making a final commitment.
To ensure you get a fair comparison and the lowest price use the same details for each life insurance quote.
Factors to consider
Deciding what type of life cover best suits your needs is tricky. You may only want your life insured for mortgage protection purposes or want specified illness cover only, so choose the right plan for your circumstances.
The following factors can help you decide which life insurance plan works best for you:
- Your age: the older you get, the more expensive the policy.
- Your monthly income: how much can you afford to pay?
- The ages of your children: how long will you need to support them?
- Homeownership: how much mortgage debt is outstanding?
- Health and lifestyle: do you smoke or suffer a life-limiting illness?
- Amount of payout: how much money you would like to leave your family?
When obtaining life insurance quotes, providing accurate personal information is essential. Any misrepresentation on your application puts the life cover benefit at risk.
Should you get dual or joint life insurance?
A joint life policy pays out upon the death of the first insured person, at which point the policy benefit ends.
If you have a dual policy (two single policies as a couple), the surviving partner will still be covered even after the first death, and benefits will be paid.
A joint policy is often the cheapest option, but a dual policy may offer extra cover.
Is mortgage protection insurance required if you have life insurance?
The lender is legally required to ensure you have mortgage protection insurance before offering a mortgage. However, there are some exceptions:
- You are aged 50 or older
- You already have adequate life insurance to pay your mortgage
- The mortgage is not for your main residence
The lender may take into account individual circumstances, such as prohibitively high premiums.
Is life insurance worth it?
Life insurance cover should be considered if you want peace of mind that your family will be financially supported when you pass away.
Life insurance or other financial protection policies are worth considering if you have:
- A partner who relies on your income
- Young children
- Family living in a mortgaged house
Where to buy life insurance
Many insurance providers in Ireland offer life insurance and other financial protection policies. Compare life insurance plans by checking out these top life insurers.
- Aviva
- Irish Life
- Laya
- New Ireland Assurance
- Royal London Ireland
- VHI
- Zurich
Popular questions
How long should I get term life insurance
It depends on how old you are when you take out the insurance. You should also consider the ages of people in your family and the years you have left to repay your mortgage.
What happens if I cancel my life insurance policy?
If you no longer need life cover or cannot afford to pay the premiums, you can cancel your policy but won’t get your money back. Whole of life cover sometimes offers a ‘surrender value’, but it’s usually worth a lot less than what you paid in.
Who regulates life insurance providers?
Life Insurance providers are financially regulated by the Central Bank of Ireland Providers will need to display a registered address on their website.
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