A Guide to Life Insurance
9 Protection Options You Need To Know
Published on by Simon O'Donovan
As life insurance is such a broad subject there can be some terms that can be downright confusing. To help you make more informed decisions our blog looks at the most popular Life Insurance policies that are available to you and your family.
- Mortgage Protection Cover
- This is the least expensive form of life cover you can have. Usually a bank will require this type of policy to secure a mortgage before draw down. It is designed to pay off your mortgage should you pass away during the mortgage repayment term. The premium is guaranteed and will stay the same for the duration of the policy.
- Serious Illness can be added to this policy on an accelerated basis and is paid out of the ‘death benefit’.
- Level Term Cover
- This means that the sum assured remains at the same level throughout the term of the policy. You can add inflation protection to your policy and the premium and benefit will increase without medical underwriting each year. Every insurer has different rider benefits that can be added to make the cover more comprehensive so don’t forget to ask our team to explain their benefits further.
- You can also choose to add an amount of Serious Illness in addition to the death benefit (Stand Alone) or to be paid out of the death benefit (Accelerated).
- Convertible Term Cover
- A great option for the young! This policy is also level cover but allows you the option to convert the policy for another term before age 65 without medical underwriting and for only a small increase in the premium. This is also age and smoker status dependent. It is similar to Level Term Cover as the sum assured remains at the same level throughout the term of the policy.
- You can choose to add an amount of Serious Illness cover in addition to your death benefit.
- Income Protection
- What’s your most important asset? Your Income! This policy is extremely beneficial for the self employed who are not entitled to state disability. It’s also very beneficial to an employed person as both can claim tax relief on the premiums at their marginal rate and take out a policy inline with any sick pay arrangement in their company.
- The cover itself is a monthly income; you can cover up to 75% of your gross salary. This is paid to you on a monthly basis and taxed as your salary is. You also get to pick a deferred period of either 13, 26 or 52 weeks at which point the monthly benefit will kick in. The further out you push your deferred period will mean a cheaper premium for the life of the policy. Anyone looking to take out Income Protection should check, if employed, what sick pay they may get from their employer if they were to go out on long term sick leave. This will help you decide which deferred period suits your needs and pocket.
- Stand Alone Serious Illness Cover
- This cover can be taken out on its own with no Life Cover benefit. This level cover pays a lump sum amount in the event of being diagnosed with a specified serious illness listed on the policy. The life companies each have an extensive list of serious illness’s and they all cover major illness such as Cancer types, Heart attack, Stroke etc.
- Over 50’s Cover
- This cover is relatively new to the Irish Market. It’s designed for customers who are over 50 years of age and have absolutely no medical underwriting. This means you are fully covered on any pre-existing conditions, however you are not fully covered until the policy is in force for 2 full years. If a claim is needed before the 2 years only premiums paid into the policy will be paid back.
- Whole Of Life Assurance
- This type of policy is a guaranteed pay out once the policy premium is paid for the life of the policy. These policies can be quite expensive but can also be more cost effective for an older client who may be interested in Over 50’s cover. There is full medical underwriting for anyone applying for this cover.
- Term Insurance With A Partial Whole Of Life Payment
- Although slightly more expensive than a normal term policy it does have a guaranteed death benefit so the client always benefits from taking out this policy. The policy covers the amount you require for the term you need and then depending on the cover, will keep on a smaller amount of life cover (max €50,000) without any further payment until death.