IT still amazes me after being 35+ years in the financial services business the number of individuals that are referred to me that do not have adequate life cover protection in place where a need specifically exists.

We all want to protect our families financially when things go wrong.

Recently Irish Life (Retail and formerly Ark Life) published claims statistics for 2022 which makes for most interesting reading:

  • The average claim amount paid was €72,787! (The average salary in Ireland is 2023 = €45K)
  • 59% death claims were for males.
  • The total number of claims paid was 2,090.
  • 98.1% of death claims were paid.
  • The biggest cause of death claims paid out was cancer at 38%.

    • Premature death

    As part of my role as a financial planner I will regularly pose the following question to a potential client as part of my needs analysis - have you any independent life cover in place to protect your family in the event of your premature death?

    Quite a number of these individuals respond with a ‘yes’ saying they have life cover in place in the form of a mortgage protection policy. This is not independent life cover to protect one’s family. It is a policy that is assigned to a lender to clear a mortgage balance on death. It doesn’t put money into the hands of a grieving widow.

    The cost of pure life cover in this country is extremely competitive when we compare this cost with our European counterparts. We always express the viewpoint that consideration should be given towards incorporating specified serious illness cover when one is arranging life cover and putting a protection programme in place.

    Specified serious illness insurance pays you a tax-free lump sum if you are diagnosed with one of the specific illnesses or disabilities that your policy covers. It is also sometimes called ‘critical illness cover.’ Irish Life specified serious illness statistics for 2022 also showed that 82% of their specified serious illness claims paid out were for heart attack, stroke and or cancer. The average claim paid out in 2022 was €71,102. The average age of the person claiming was 53. The example below illustrates how competitive this protection cover can be to arrange.

    Example – Life cover and accelerated specified serious illness cover

  • Male aged 32 next birthday and female 30 next birthday
  • Both non-smokers
  • Dual life convertible term cover €250,000, life cover with €50,000 accelerated specified serious illness cover on both lives.
  • Level cover
  • Term of 20 years
  • Monthly cost = €48.91*

    • *The premium above assumes both lives assured are accepted on first class terms.

    Tips for arranging life cover

  • Contact a qualified financial advisor who can recommend the correct level of life cover and specified serious illness cover to arrange based on your current needs and financial situation.
  • If you are a smoker, give the cigarettes/vapes up as smoker rates are 25% dearer for life cover than non-smoker rates. One must be off all cigs etc. for 12 months to get non-smoker rates.
  • Consider including some element of specified serious illness cover in this protection plan.
  • Do not use one of the main banks to arrange any type of life cover as they are invariably tied agents of one of the main life companies (e.g. Bank of Ireland – New Ireland). Chat to a financial advisor who is not a tied agent who can shop around for you to obtain the most competitive quotes for the cover recommended.
  • Give a lender the bare minimum policy they require for a mortgage to be issued – mortgage protection. Arrange your own additional life cover separately to protect your family unit in a free-standing protection plan, preferably using a level term life assurance policy.
  • If you are arranging a mortgage with your partner and are not married (cohabiting), care is required at the outset when arranging the mortgage protection cover on both your lives. Cohabiting couples are treated as strangers in the eyes of the revenue when it comes to inheritance tax. Many couples do not fully understand the inheritance tax implications when their unmarried partner in life dies. Seek advice from a qualified financial advisor who can assist you in mitigating this potential tax!

    • Niall Rooney B. Comm. QFA. ACII. FLIA is a financial planning manager with City Life Galway 087 2482639 – niall@citylifegalway.ie