Life assurance = Replacement of Income

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Life assurance = Replacement of Income

This is a copy of an article published on the 28th of July in the Irish Independent. It follows some research by a life assurance company – Caledonian Life- that we are now placing less value on our lives since we did 10 years ago.

Life assurance is taken out so that you can provide an income for your dependants or pay off a debt  in the event of your death.

So when trying to decide what level of life assurance is appropriate – we would suggest that you look at your monthly budget and see what is the basic amount your family would require to spend each month to survive and use this figure as the basis of your plan..

THE value that people place on their lives has crashed since the downturn.

Men in their 40’s believe they are now worth a third less than the value they were placing on themselves a decade ago, a survey has shown.

The findings emerged from a study of the levels of life assurance cover put in place.

The sum assured peaked in 2008, but has fallen sharply since in line with the squeeze on incomes and personal debts getting out of control in many households.

Caledonian Life, which conducted the research, said the lower levels of life cover put in place reflect our sense of reduced financial worth.

Joe Charles of the insurer said: “Over the last decade Ireland has seen its economic and societal landscape change dramatically. So, it’s no wonder that people’s assessment of their financial value has changed.”

Life cover is normally put in place to provide a replacement income and to maintain dependents’ lifestyle if the main breadwinner in a family passes away.

Mr Charles said this meant life cover can be seen as an indicator of the financial value people place on themselves.

Caledonian Life looked at the overall averages of life cover in place (or sum assured) in 2004 and also in 2013. This showed that the sum assured per policy amount has by dropped by an average of €67,000.

“This drop is particularly evident in men in their 40s, who now believe that they are worth one third less than in 2004, and 41pc less than the peak of 2008,” the insurer reported. The average sum insured for men in their 40s is now €267,500, down from €454,000 in 2008.

In the past 10 years it has generally been men in their 40s who have the most life cover in place.

But he added: “However… many experts would argue that it’s actually those in their 30s with young children and many other financial responsibilities, and who are also facing 20-plus years of funding them, who have a greater need for bigger levels of life cover.”

The study found that women consistently have lower levels of cover in place than men, particularly in older age categories.

The cost of life assurance has decreased by around 25pc in the past five years due to greater competition, and the fact that people are living longer.

Charlie Weston

PUBLISHED 28/07/2014|02:30

Irish Independent


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