Life Insurance Ireland

Taking financial advice before buying life insurance

Many studies have shown the benefits of taking professional advice when it comes to buying financial products. Life insurance is near the top of the list here, primarily because it is so important to take advice and work out what level of cover you should have. It's all too easy to take out a policy for, say, €200,000 and assume you're covered – but that amount may fall far short of your family's true needs.

1. Why Life Insurance Matters

If you are single with no one depending on you financially you are in a less onerous position than those who have family commitments. However, you may still want life cover to leave money in your will to friends or family or pay down debt.

If someone depends on you financially the necessity of having cover in place is far greater. If you have the right amount of life cover it can make an enormous difference to the quality of life of loved ones left behind. This is especially true in family situations where the surviving spouse or partner has insufficient income, may have debts including mortgage and loan debt, children to look after and perhaps dramatically changed employment obligations.

The bereaved family's world can be turned upside down, dealing with grief, an altered future and coming to terms with the consequences of a changed financial position.

2. The Importance of the right Life Insurance Cover

The most important figure to get right is the level of cover you need. Life insurance is surprisingly cheap when compared to the benefits.

The second priority is to identify the product characteristics that suit you best. This might include, inflation protection, policy conversion flexibility, sickness benefit, regular income policies.

The third task is to match affordability with the level of cover and the product features that best suit you.

Your financial adviser will guide and advise you in this process.

3. Questions you need to consider

Our advisers will start by working with you to identify what your situation might be if one spouse passes away. Sometimes it can be difficult to ask these questions and imagine the unimaginable, but it helps create peace of mind for all concerned.

What factors do we need to consider?

4.Factors that influence cover

• The term
  
  

  It is important to give thought to the policy term.

  The longer the life insurance term, the dearer the price. Choosing the right term is important and generally the term should reflect the needs of your dependants if you were to pass away. For example, the needs will be less when children have grown up and left home.

  Term life insurance policies cover you for a specified term and at the end of the term the policy ceases, and no payout will be made after that date.

  Whole of life policies cover you until death but are more expensive.

  Some policies are designed to ensure that the cover level is highest when your expenses are high and can reduce later in life. These policies are known as convertible policies.

  In all cases it is best to choose a guaranteed premium where the price does not change or where the change is predictable as in the case of inflation adjustable pricing- where the price goes up by circa 3% per annum and cover also increases.

• Health
  
  

  Your health is your wealth.

  Life Insurance companies reward you for being healthy by charging lower premiums. Smoking doubles life insurance costs and lifestyle conditions can also increase your premiums.

  Life insurance companies have different rules when it comes to quoting for insurance cover where significant health conditions are present. We are appointed advisers for all the major Life insurance companies in Ireland, and we search the market for the best value for your individual circumstances and use our experience to ensure you get the best outcome.

• Income
  
  

  Income is your most important asset. For example, take the situation of a 35-year-old couple owning a house worth €500,000 with a €400,000 mortgage, supported by a combined income of €100,000. Take away one income of €60,000 and for a 35-year-old and you are looking at a loss of €2,100,000 before inflation, up to the age of 70. Your mortgage protection insurance will pay off the mortgage but what about the lost income! Life insurance cover can step in here.

  To understand the impact of lost income we need to prepare a budget looking at current expenditure and income and a revised budget looking at the position after a loved one has passed away. We need to then identify how this gap can be filled through a combination of life insurance, cost management and remaining income potential.

• Debt and Savings
  
  

  It is always advisable to build up a rainy-day fund through regular savings. The best practice to achieve this is to have the savings transferred to a separate account on the day you receive your wages – and don't dip into the fund until it has reached a certain level and even then, best keep it growing.

  Household debt can be an issue. Car loans and personal loans need to be cleared on the passing away of the account holder. Provision should be made for these obligations when setting up your life insurance policy.

• Children and Education
  
  

  Fortunately, here in Ireland we are currently in an era of very low education fees. This may change over time, and it is advisable to have money set aside for future education needs. This generally involves long term savings plans but in the event of the death of a parent these savings plans may no longer be affordable. Provision should be made for these future costs when establishing a suitable life insurance level.

• First Year Costs
  
  

  This can be a very expensive time, full of adjustments, reduced income and additional costs. It is helpful to earmark a sum equivalent to a year's income to cover this period until things settle down; this figure would be an addition to the main lump sum you have established is required.

5. Benefits of independent life insurance advice

• You deal with experienced, friendly advisors with vast life insurance knowledge.
• You get professional advice on the level of life insurance you need and can afford.
• You get the lowest life insurance quotes on the market.
• You receive discounts of up to 20% on standard life insurance quotes.
• You have free access to our mortgage advisers on all mortgage questions.
• We look beyond the basic cover and analyse and compare additional benefits within policies.
• We provide online application facilities and same day approval including digital completion.
• We look after everybody the same, including clients with non-standard medical conditions.
• Established in 1996 we are here for the long term, and we've helped thousands of Irish families secure peace of mind since.