It’s not just about the Money

 In Life Insurance
DID YOU KNOW THAT

Adults: 2 out of 5 have NO life cover protection

Parents:  1 in 3 parents have NO cover whatsoever

The average cover for adults with life insurance is €103,000 just under three times the average national income. Source: Red C Survey

As the saying goes, ‘the only certainties in life are death and taxes’. We can’t predict what life has in store and when it comes to things like premature death or serious illness we usually think, ‘it will never happen to me’.

You can get €300,000 life-cover for as little as €21.62 per month1

The average cover for adults referred to above of €103,000 would cost the minimum of €10 per month1

1Based on an adult, non-smoker, aged 35 years in good health with no special terms over 25 years

In reality, we all know someone who has been affected. So it is important to protect our loved ones and ourselves by planning in advance.  We all have different needs when it comes to life insurance and they may be quickly summarised as follows:

  • I want to protect my family if I die or become seriously ill
  • I want to pay off my mortgage if I die or become seriously ill
  • I want to protect my business
  • I want to protect my loved ones from a large inheritance tax bill

The above scenarios are driven by your untimely death and most of us think that it won’t happen to me!

The monthly premium cost of the life cover protection is often the main deterrent when deciding on whether to take out life cover protection on our own lives or the lives of others and on this basis, the majority of us decline the opportunity to get life assurance.

This blog is mainly highlighting the fact that you can pay a relatively small monthly premium for the comfort of a significant lump sum pay-out in the event of death. Are you aware that there are many other additional benefits with a life term policy as well as some optional extra benefits if you would like additional types of cover.

If you take out a standard Term (Life) assurance policy, you should know that the following additional benefits are included:

ADDITIONAL BENEFITS
Children’s Cover – €6,000 No extra cost
Protection Flexibility No extra cost
Accidental Death Benefit No extra cost
Guaranteed Insurability No extra cost
Terminal Illness No extra cost
Life Cover Partial Payment No extra cost
Overseas Surgery Benefit No extra cost
Second Medical Opinions* No extra cost
*Alternative extra benefits** No extra cost
If you choose to include Specific Illness cover
Covering over 50+ Specific illness Additional Cost
Specific illness Partial Payment No extra cost
Specific Illness Children’s Cover – €25,000 No extra cost
OPTIONAL BENEFITS***
Hospital Cash Cover Additional premium
Accident Cash Cover Additional premium
Inflation Protection – indexation Additional premium
Guaranteed Cover Again Optional extra

*This differs with each life company
**This includes speech therapy, physiotherapy, reflexology and much more
***Optional benefits may be chosen and included from commencement of the policy

Let’s define one of the above a bit further:  Guaranteed cover again

This allows you change your cover to another guaranteed term plan at any stage throughout your plan, without any new evidence of health:

  • Does not include inflation protection, hospital cash cover or accident cash cover
  • The level of cover on the new plan cannot exceed the level of cover on the existing plan at the date the plan is converted
  • You can choose a term up to the maximum available at the time you convert
  • You can avail of this option more than once. The payments you make will reflect this.

This optional extra is sometimes referred to as a “conversion” option.

Question

John and Mary are married with 3 children.  John has a salary of €75,000 and Mary is a stay at home mum for the foreseeable future.  John is 44 and Mary is 41 years of age.  What is the ideal level of life cover to have to protect their family for the foreseeable future? 

Good Question – there is no perfect science or mathematical equation to answer this!!

Let’s settle on €500,000 on both lives.  The perception that you have to take out life cover for ever or for 30 or 40 years is there but in most cases is not realistic and will probably be unaffordable today and into the future.

The cost of €500,000 over 30 years for John and Mary would be €166 per month

One option is take out a 15 year term cover on both lives with conversion (guaranteed cover again) and should you not have a claim within 15 years, you have the option to take out a further term for the same or lower level of protection.

The cost of €500,000 over 15 years for John and Mary would be €95 per month

The main advantage in this scenario is that (1) the monthly cost would be substantially less for a 15 year period and (2) there is no further medical evidence required to put this additional cover in place in the future.

Hopefully as outlined above, there is scope for everyone to have some level of life cover along with additional benefits, if required.  It is recommended that you seek financial advice before challenging your life cover needs and requirements and determining the overall cost.

At First Choice, we have a range of life insurance policies designed to give you the peace of mind that your family will be looked after in the event of your death.

Having sufficient Life Insurance in place is the foundation for most Long Term Financial Plans.  We can arrange for it to be in the form of a once off lump sum or a monthly income paid to your dependants. Remember, benefits can be used to:

  • fund your family’s lifestyle
  • secure your children’s education
  • pay down outstanding debt in the event of your death

First Choice are a multi-agency intermediary and we will quote, with all the life companies on the market, to ensure you receive the best value product to match your personalised requirements.

If you would like to discuss your options further, please contact me on 061-317260 or email jim@fcfs.ie.

Jim Wallace
Jim Wallace RPA SIA QFA ACCA is a Qualified Financial Adviser (QFA), a member of the Life Insurance Association (LIA) and is currently seeking membership to the Irish Institute of Pension Managers of Ireland. Having gained valuable experience in the Life and Pension industry to date together with an ACCA qualification gained with Deloitte and further time as a Financial Accountant with Element Six, Jim’s experience to date has made him a very welcome addition to our team. His overall financial knowledge gives First Choice a great advantage when assessing goals and delivering financial targets and strategies for both our Corporate and Individual customers. Growing First Choice’s position in the corporate market is a goal that he has set for himself while increasing our client base as a Pensions Specialist. His focus is to provide ‘best advice’ to our customers at all times.
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