A Complete Guide to Life Insurance

Ensure to speak to your financial advisor about life insurance but here’s what we’ve learned after conducting thorough research…

No one likes to consider their own mortality, but with life so full of uncertainties, it pays to put protection in place. Tragically, it is often when everything seems to be going well that the worst can happen. If your family were to suffer financially if you were no longer around, life insurance is an investment you should seriously consider.

Finding the best policy for you

This insurance provides an effective method of protecting your family from an uncertain financial future. If you were no longer around, would the remaining household income be sufficient to cover the cost of mortgage repayments, university fees and household bills?

Factors that determine the cost of life insurance

Age – the older you are, the higher the risk of death. This will result in a premium increase.

Smoking – smokers can pay up to double the premiums of non-smokers; however, if you quit smoking and do not smoke for a year, inform your insurer and they may well reduce your premium.

General health – your family’s medical history and pre-existing medical conditions will be considered and may well affect your premium.

Work and lifestyle – your premium is likely to increase if your work or lifestyle put you at a greater risk of death.

Example Costing for a 34 year old non smoker for Term Life Cover

Types of Life Insurance

Joint & Dual life policies

Getting a life insurance policy is a way that you can safeguard the future of your family after your death. However, it is important for you to get the right life insurance policy that will cater for all your needs. There are two modes of life insurance policies that you should consider especially when you have a family. This is joint life policies or dual life policies.

Joint life policies

Joint life policies usually cover two people’s lives. This life insurance is more affordable to couples as it is cheaper than taking two separate life policies. A joint life policy is paid out after the first spouse dies.

This is why you will find that when it comes to life insurance policies, most couples take one joint life policy. The reason is that it is cheaper and has less paperwork.

However, a joint policy has its shortcomings.

• Most joint life policies usually cover the death of the first person. This leaves the other spouse without insurance cover. Also, when the remaining spouse dies, there will be no money left for the remaining dependents.
• If the relationship breaks down in the middle of the policy, you will still have to continue with the joint policy or the policy would expire since insurance providers will not be able to divide the policy into two separate policies.
• Also, you will find that since this kind of policy is on a first death basis, you might want to take another cover after your spouse dies. This will be very costly as insurance premiums increase as you get older.
• You will also find that the insurance policy will cease to exist if you or your spouse fail to pay their share of the premiums. This mostly happens in case the relationship does not work out.
• A joint life insurance policy does not always cater for the needs of both parties. It does not consider each of the individual needs of the couple and the sum insured is not usually enough at most times since it is paid after the death of the first person.

Dual life policies

This is where you and your spouse each take your separate life insurance covers. It is relatively more expensive than the joint life policy as you will need to have two separate policies for each spouse.

This has various benefits over the joint policy

• It ensures that there is a double pay in the event death occurs. The first to die will have their policy paid, and when the second spouse dies, your dependents will also be left with your policy to assist them.
• Also, if you have two separate jobs, it is easier to have dual life policies than have a joint life policy. This is because joint policies work better in a setup that has one person as the provider.
• You can take a dual life policy with your wife that will suit your individual needs. You will also be able to take a policy that you can afford and for the period that you find applicable to you. Having dual life policies makes it easier for you and your spouse to customize it according to your different needs and address issues such as age and different health conditions.
• You will also find that in case your relationship does not work out; the policy will remain. This is better compared to the joint policy that expires in the case of a divorce.

At the end of everything, you should carefully think about the kind of life insurance policy that is the most convenient for both you and your spouse.

You should also consider your financial needs and pick an affordable life insurance policy.

Whether you choose to have a joint policy or dual life policies, you should ensure that you have your policy written to trust. The essence of doing this is that it will ensure the payment is not delayed. It will also ensure that the payment is not liable to tax as it will be paid to your nominated secretary and not to your estate.

Once you take a life policy, you will have ensured that you take care of your family even when you and your spouse have died.

Term Life Insurance

Life insurance is the kind of insurance that pays your family a lump when you die. Your family can be able to use this money to take care of bills as they need it most at this time. If you are thinking of the kind of insurance cover you should take, you might want to consider the Term Life Insurance policy.

Term Life Insurance is life insurance that covers you for a specific period that you agree upon. In case you die during this time, the amount insured will be paid to your beneficiaries. This kind of insurance is important especially if you have people who depend on your income.

The Term life Insurance policy has some benefits that you can also add if you do not want the life cover alone. It provides a range of covers to protect your family’s future income.

Under the Term Life Insurance cover, you will have financial cover against:

1. Death
2. Specified Illnesses
3. Time you spend in hospital
4. Accidents

The benefits available under the Term Life Insurance plan that you can add to your cover are as follows.

• Life cover – Here, your family will get paid an agreed amount upon your death.
• Specified Illness cover – Under this benefit, you will be paid a lump sum if you are diagnosed with one of the conditions covered. You and your family will also be given partial payments on some of the medical conditions. Some of these illnesses include cancer, stroke and others that have permanent symptoms.
• Hospital cash cover – Here you will be paid a daily amount for the time you spend in the hospital getting treated.
• Accident cash cover – If you happen to get involved in an accident and are unable to work, you do not need to worry. Our accident cash cover will ensure that you are paid a given amount during the period you are not able to work. The amount is paid on a weekly basis.
• Guaranteed cover again – This benefit allows you to change your cover to a different guaranteed plan during the duration of your plan. You can do this without having to give any information concerning your health.
• Inflation protection plan – This cover allows you to increase your cover yearly by the inflation rates.

When you choose the Term Life Insurance plan, you do not need to worry about payment as there are flexible payment plans available. You can choose to be making your payment every month, three months, and six months or yearly depending on what is comfortable for you.

However, you will need to be over 18 years for you to apply for this cover. The cover is available for a minimum of 2 years and a maximum of 40 years. You cannot apply for the Term Life Insurance plan if you are over the age of 80 years. Once you attain the age of 80, you will no longer be protected under the cover. Also, once the given period expires, you will no longer be covered, and you will need to take another insurance cover again.

There are some vital concepts you will need to know about the Term Life Insurance plan

• The amount is only payable if you die during the time you are still covered.
• The minimum age for you to apply for the insurance cover is 18 years, and the maximum age is 77 years.
• The amount you agree to pay will remain constant unless you choose the inflation protection option.
• The insurance cover will expire if you fail to pay your premiums. The money you will have paid for the period until you were unable to make your payments will also not be refunded to you.
• The amount insured will not be paid in certain circumstances. For instance, if you do not give full information regarding your health, occupation and any other risk factors associated with your life, no payment will be made.
• A Term Life Insurance Plan is not a savings plan and as such you cannot cash it out.

The Term Life Insurance Plan will cover you for the period you choose. You must decide beforehand the benefits you want and the cover you need as long as you will be financially capable of making your payments.

 Some of the best life insurance companies in Ireland

Irishlife.ie	Zurichlife.ie	Aviva.ie

Life Insurance is a big deal, but, it can be a little confusing. There are all sorts of plans, so it can be hard to choose what’s best for you.

What is life insurance, and how does it help you?

To put it simply, life insurance is a contract between you, and the insurance company. In the event of your death, that policy will pay out a sum of money. In some cases, the insurance may even cover terminal or critical illness.

In order to get life insurance, you’ll need to;

• Fill out paperwork and keep an open line of communication with the company you wish to join.
• Be ready to give out personal information about you and your family’s medical history, and possibly take an exam.

Do I have to have a medical exam?

When applying for life insurance, the provider will ask you about your health and your lifestyle. They may ask you to take a medical exam if;

• You’re a smoker.
• You have pre-existing health problems, or have had a serious illness in the past.
• You are overweight.
• Your family has a history of serious medical problems.

If you have pre-existing health problems, or have an unhealthy lifestyle, they will probably ask you to take an exam. If you don’t want to take a medical examination, then search for an insurance company willing to bypass that step if you can.

If you can prove you’re healthy, chances are higher that they won’t ask you to take an exam. However, they will ask to talk to your general practitioner, so be ready to agree to that.

I don’t want a medical exam, what options do I have open to me?

There are two available options to consider. Term life insurance, and over fifty life insurance.

• Term Life insurance is for the younger population. If you’re healthy, they probably won’t make you take an exam. It costs the insurance company money to have your doctor do paperwork, so they try to avoid doing it.
• Over 50 life insurance is for seniors who won’t do a medical exam. This type of plan will accept people who have health issues. Each company has standards though, so it’s important to do your research.

What are premiums, and how are they decided?

Premiums are the payments you make. In the case of life insurance, premiums are decided based on your overall health. Lower premiums are given to healthier individuals, with a low risk of illness or sustaining injury.

Factors that may decide a premium are;

• Your gender, age, weight, and lifestyle.
• Your occupation. Dangerous ones tend to have a higher premium.
• Family medical history.

If you do have a high premium, don’t worry. There are things you can do to lower it. Try to eat healthful foods. Be active, watch your weight, and don’t smoke. Drink moderately, and consider breaking bad habits that may impact your lifestyle negatively.

I’m married, should my spouse and I apply for joint life insurance coverage?

The answer for that is entirely situational. If something were to happen to the both of you, the family would only receive one lump sum. Another thing to keep in mind is that joint coverage isn’t something you can split in half.

What this means for you;

• Even if you divorce, you must both keep making payments. If one, or both of you doesn’t pay the premium, you will lose your policy.
• In the event of a payout, there could be disputes over who is entitled to the money. This is especially true if an ex-spouse remarries and has children.

Having separate policies avoids all of that, and you can be sure that the payouts will go exactly where they need to.

What does it mean to write your policy ‘in trust’?

Writing a policy in trust, simply means that you are protecting your investment. If you do this, the people entitled to the insurance money will avoid paying taxes on inheritances. This will also protect the executor of your will, meaning they won’t have to apply for grants that could take months to approve.

Some final things to keep in mind;

It’s important to compare quotes from several different companies, and choose the one that best fits your lifestyle. You need to be open and honest, because if you aren’t, your policy could be invalidated. That means that you won’t be able to collect on the money when you, or your family needs it the most.

How Much Does Life Insurance Cost?

There are a range of life insurance policies on the market that pay a benefit on death. Some of these policies will offer more cover than others, but they’ll cost more too. While we’d all love to be able to put cover in place that provides our loved ones with the greatest degree of protection, most of us also have to think carefully about a policy’s affordability.

Hunting for the cheapest policy will always result in a compromise on protection, so it’s essential we understand the balance between cover and cost to allow us to put the level of protection we need in place, without breaking the bank.

What factors should you consider when determining how much to spend?

The greater the level of cover you require, the more you’re going to have to spend. Here are five of the most important factors you should consider to determine the appropriate level of protection for you.

Replacement Income

An early death will drastically reduce your earning potential. A 35 year old earning €40,000 per annum will typically earn €1,200,000 before they retire. In real terms (including inflation), you can probably double that figure.

There are some pension policies that allow for the payment of a proportion of the policy holder’s income on death; however, such policies are few and relatively far between.

To consider the level of replacement income your partner will need once you’re gone, think about where their income will come from. Do they work fulltime? Will they rely on the state? Will they have dependents to look after? How much will they need to maintain a reasonable standard of living?

The cost of dependents

If you have children you should not only consider the cost of looking after them, but also the expense of their ongoing education. Paying for children to go to university can be a real struggle for a single parent family.

Mortgages and existing debts

If you have a mortgage on your property you may already have a mortgage protection policy in place. If not, your partner’s ability to meet the cost of ongoing mortgage repayments is definitely something you should carefully consider.

Final expenses

There are also a number of costs associated with your passing. The costs of the funeral and other ‘final expenses’ can take a good chunk out of your savings. Working these costs into your level of life insurance cover will ensure your partner is not left out of pocket once you’re gone. However, the more comprehensive your cover, the higher the premium – so don’t pay for cover you can’t afford.

Inheritance tax planning

It’s also well worth considering the impact inheritance tax will have on your estate. If the value of the estate exceeds certain thresholds when it’s distributed, your dependents will be exposed to tax liabilities which will reduce the inheritance they receive.

Life Insurance for Over 50s

Over 50’s Life Insurance is a different plan from term or whole life insurance. It is basically a protection feature to cover bills and expenses for your loved ones once you have moved on. It’s insurance payout to your family after you pass can be in the area of up to €25,000. It’s a life insurance policy set up to allow your loved ones greave and moarn over your passing by securing any funeral or legal costs you may leave behind when you die.

This life insurance is totally guaranteed and your regular payments stop when you turn 90 and your cover remains intact.

Probably the best Life Insurance plan for anyone over 50 years of age is with IrishLife. The plan is designed for 50 – 80 year olds and is only available to residents in Ireland. The plan guarantees to pay your family, spouse or loved ones a specified cash sum when you pass from this life.

Some key things to know about the Over 50’s Life Cover

• There are no medical questions required.
• You have guaranteed acceptance
• It’s only available in Ireland

The over 50’s life policy can provide you with up to €25,000 in cover which is a nice pot to leave behind to your family or loved ones. People sometimes criticise the need for life insurance stating reasons like “what’s the point, I won’t be around to spend it”. What some people don’t realise is your death can be extremely hard for your family to deal with and a cash sum can give them time to grieve.

What kind of costs would my policy cash sum cover?

• Bills and general family expenses.
• Funerals cost quite a lot of money.
• Children’s education.
• Mortgage Payments.
• Subsidise family income for a short period.

So if some of these costs are something you might worry about after you die you should consider getting in contact with an insurance broker.

Why is Life Insurance for Over 50’s so expensive?

If you’ve go searching for a lot of different insurance policies and been declined for health reasons then you still have the option of over 50’s life insurance, if you’re over 50 obviously.

The reason these policies can be so expensive is due to the fact they are the same for price for everyone. If you’re in good health / bad health it doesn’t matter on this policy.

You’re going to pay the same amount as someone who is dying due to the fact these policies are riskier for an insurance company because they may end up paying out sooner than expected.