What is life insurance?

A life insurance policy provides money for your dependants when you die. As with any financial product, there are several things to consider before you choose your policy. If your children are young, you may need more cover because they will depend on you for longer. You need to purchase enough insurance to:

  • Provide an income for your family for as long as they need it
  • Clear any loans or mortgage you may have
  • Ensure there is money to cover future costs like college for your children

How can I protect my family financially if I die?

Nobody likes to think about the worst happening, but death is a fact of life. It’s a good idea to have a plan in place to protect your loved ones financially in the event of your death.

If you die prematurely, this may have serious financial implications for your family. This could mean a significant reduction in their financial wellbeing because your earned income will stop. Furthermore, inheritance tax could arise depending on what and how much they inherit from you.

There are some social welfare benefits in place to support your family in the event of your death like the widow’s pension, however they will usually only amount to a fraction of your income. These benefit payments are designed to cover only the bare necessities of life. By taking out a life insurance policy, you are ensuring your family’s financial security should the worst happen to you.

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Why choose MadeSimple?

There are two key decisions you will need to make when taking out life insurance cover:

  • The amount of cover you will need
  • The type of cover that will best suit your needs

Here at MadeSimple, we explain the choices available to you in simple language allowing you to make an informed decision. We will advise you on the level of cover you need and the best type of cover for you, based on your personal and financial circumstances. We will explain the cover provided and the restrictions and limitations associated with it. We will then put the cover in place for you. Ultimately, we will ensure you choose the cover and product best suited to your needs and circumstances.

Different Life Insurance Policies

With life insurance, you have a number of options: you can get cover for a limited time period. This is called ‘term life insurance’, or cover to last throughout your life which is called ‘whole of life’ cover. You can also opt for a ‘joint policy’ or ‘dual-life policy’ with your partner or joint borrower. There are also several optional extras you can add to your policy, including: conversion, indexation, and income benefit.

Life Insurance FAQs

Life insurance policies pay a lump sum to your named beneficiary or your estate if you die during the term of the policy. Term life insurance is the most straightforward and one of the most affordable forms of life insurance. For example: you might take out a term life insurance policy on your own life for €100,000 over 10 years. If you die within 10 years (the term), the policy pays out €100,000 to your dependants. If you don’t die within the term of the policy, no benefit is paid out and the policy ends.

Whole of life insurance guarantees that a lumpsum will be paid whenever the policyholder dies, as long as the monthly premiums are maintained. Whole of life cover is more expensive than ‘term life insurance’ because the cover lasts for the whole of your life. With whole of life cover, some of your monthly premiums may be invested by the insurer into investment funds. This exposes you to the risk of your premiums increasing. However, some companies offer guaranteed whole of life rates. This means that the premium will not increase for the same level of cover throughout your life.

If you are in a relationship and have children, you may want to consider a joint life policy. This covers two people on the one policy. The policy can either pay out a lump sum when the first of you die (a joint life policy) or a separate lump sum on the death of each of you (a dual life policy).

If you add a conversion option to a term assurance policy you can renew or extend the term of your policy at a future time for a cost appropriate to your age and the terms offered by the company at the time. You can do this regardless of your state of health at that time. This protects you if your health deteriorates, and you can’t get cover in the future. Make sure you discuss the terms of conversion with your broker ie. when can conversion be exercised? and are there restrictions on the options you can select on conversion?

This allows you to guard against inflation eroding the real value of your cover over time. Premiums and cover increase annually at your policy anniversary date. It is important to note the rate of increase in premium versus the rate of increase in cover. Some policies have a cheaper premium to begin with but have a higher rate of increase in premium over time.

You may prefer to have a benefit paid as an income to your family rather than a lump sum (or in addition to a lump sum). This may be appropriate if you have a young family and need to provide for their day-to-day expenses until your children reach maturity. Your Financial Broker can advise you on all the options and their costs to help you to select the most suitable plan for you and your family.