Life Assurance: Protection Advice

February 8, 2023
February 8, 2023

Life insurance is far more than a simple financial transaction; it is a robust protective shield that secures your family’s financial well-being. It ensures that your loved ones remain financially stable, no matter what unforeseen events may occur.

By viewing life insurance this way, it transforms your insurance from being a mere obligation into being a meaningful investment in your family’s future. Rather than seeing it as a compulsory purchase, you begin to recognize it as a vital act of care and responsibility. Life insurance becomes a deliberate choice to provide your family with enduring security and peace of mind, reflecting your commitment to their long-term protection and stability.

Your choice once made, should be reviewed regularly and especially if circumstances change.

Introduction to Life Insurance; What You Need to Know

Home Insurance protects your house.

Car Insurance protects your vehicle.

Life insurance is designed to protect your loved ones financially in the event of your untimely death during the term of the policy. Unlike a house or a car insurance policy, human life cannot be repaired or replaced. Once you are gone, the loss is permanent, making life insurance a crucial measure to ensure your family’s financial stability and well-being.

Let’s start with: “How does Life Insurance work?”

And why life insurance is an essential component of a comprehensive financial plan, and how it can provide peace of mind knowing your loved ones are protected.

What is Life Insurance?

As an individual, your income is crucial to your family’s financial well-being. Your hard work ensures that essential expenses are covered, including:

  • Paying the mortgage
  • Keeping the lights on
  • Buying groceries
  • Taking family holidays

These financial contributions are fundamental to maintaining your family’s lifestyle and security.

But if you were to die suddenly – Your paycheck vanishes with you, and the financial health of your family could be at serious risk.

How would your family cope without your income?  They will be struggling emotionally to deal with your death, but then what about the financial worries – will they also struggle significantly with these?

This is precisely why life insurance exists—to offer financial protection and peace of mind. By choosing a suitable amount of coverage, you ensure that in the event of your death, the insurer provides your family with a tax-free lump sum.

Through life insurance, you create a legacy of love and responsibility, ensuring your family’s financial well-being is protected no matter what happens.

Where Can You Buy Life Insurance in Ireland

When it comes to purchasing life insurance, you have three options  consider:

  • Direct from the insurer: Limited to a single insurer, reducing your options.
  • Through a bank: Also limited to the insurer partnerships that the bank has, restricting your choices.
  • Via a broker: Offers access to a wide range of insurers, providing the broadest selection and the opportunity to find the best policy to suit your needs.

Choosing a broker allows you to explore multiple options and select the most suitable insurance coverage for your specific requirements.

Types of Life Insurance Available in Ireland

Let’s compare the two main types, term life and whole of life

Term Life Insurance

With term life insurance, you are insured for a specified number of years.

  • For example, if you have a policy that covers you for 20 years, your family will receive a payout if you pass away within those years. Once the 20 years are up, you no longer have coverage unless you extend the policy.

Due to its time-limited nature, term life insurance is generally the most affordable form of life insurance.

Whole of life insurance

Whole-of-life insurance does not have an expiry date. It provides coverage for your entire lifetime, AS LONG AS YOU CONTINUE to pay the premiums. Due to the guaranteed payout, premiums for whole-of-life insurance are higher than those for term life insurance. It is advisable to avoid reviewable whole-of-life policies, as insurers periodically review and increase premiums to levels that may become unaffordable as you age. This often results in policyholders canceling their policies, allowing insurers to keep the accumulated premiums without providing a payout.

If you currently hold a reviewable whole-of-life policy, consider replacing it with a term or fixed-price whole-of-life policy. Additionally, you may have accumulated cash value on your reviewable policy that can be accessed when you make the switch.

Guaranteed Whole of Life Insurance: No reviews and no premium changes. The policy lasts for your entire life and can even provide a tax-free payout to cover inheritance tax bills. Some plans even offer the option to get 70 percent of your premiums back in cash.

Both Guaranteed Whole of Life and Term Insurance have their pros and cons. The major downside of Term Insurance is the possibility that you might outlive your policy. If that happens, make sure to choose a policy with a conversion option.

However, as your family gets older and hopefully, they are no longer financially dependent, you will not need as much protection cover.

Hence the need to undertake regular reviews.

Determining Your Life Insurance Coverage

When considering how much life insurance coverage to purchase, it’s essential to understand how your family will be supported in the event of your passing. Typically, beneficiaries receive payments in the form of either a lump sum or monthly installments, which are intended to replace your potential earnings until retirement or mirror your typical income.

Do you try to cover your gross salary, do you calculate the cover until your children are 18, 23 or 25? – do you include cover for funeral expenses? Do want to build in education expenses for your children?

Maybe the best method would be to estimate your monthly living expenses – be it, €3000 per month or €4000 per month, as this is the income your family will need to survive financially, buy food, clothes, heat the house, run the car, and go on holiday!

It’s crucial to note that the appropriate amount of coverage varies for each individual and family, so seeking personalized guidance is essential.

GET HELP TODAY – from a qualified person!

Understanding Life Insurance Costs.

Several factors influence the cost of life insurance, including the type of policy:

  1. Your age
  2. The amount of coverage
  3. The term
  4. Your smoking status
  5. Health issues
  6. Any additional riders

Whole-of-life premiums typically range from 10 to 15 times higher than term life premiums due to their lifelong coverage and investment component.

Take Action to Protect Your Family Today!

Ultimately, the intricacies of how life insurance works matter less than ensuring your family is protected from financial hardship in the event of your unexpected passing. It’s crucial to have suitable coverage in place to prevent your loved ones from facing financial strain.

If you do not have protection cover and you have financial dependents – Please reach out to us today.

We can help.

You get peace of mind to know you have the financial products in place to help your family.

And we sincerely hope you or your family NEVER need to call upon this insurance!

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Dooley Insurances Naas: 045 431642
Edenderry: 046 973 1218