Do you dread paying for life insurance because you might never see a return on your investment?
What if I told you there’s a way to ensure you always get back more than you put in?
Listen up, and I’ll tell you all about it, but first, let’s look at the two types of whole life insurance you may have already heard of.
This type of cover is dreadful.
Some insurance boffin designed these policies to become so expensive that you eventually cancel them, so they never have to pay.
Unfortunately, this results in financial exposure when you’re older.
If you have one of these policies or know someone who might have one (your parents, maybe?), advise them to find an alternative as soon as possible.
Here’s how they work
If you or someone you know has this type of policy, consider finding an alternative as soon as possible.
Here’s a more detailed article we wrote on the reviewable whole of life insurance.
Now let’s look at a much fairer type of whole life insurance:
This is the one we have always recommended.
It’s fair because you know exactly how much you will receive and how much it will cost each month.
No nasty surprises and no one has yet found a way to outlive the policy.
But now, the moment you’ve been waiting for, my favourite type of whole-of-life cover:
This one is a mixture of an ordinary term life insurance policy and a whole life insurance policy.
A hybrid, if you will.
Let’s look at a policy I recently arranged:
EXAMPLE
Susan contacted me looking for €100,000 life insurance over 20 years for herself and her husband.
However, she wanted to make sure she wasn’t paying, forgive the pun, dead money.
Susan wanted to get something back from her policy.
We looked at life insurance with cash back, which was outside her budget.
Instead, we settled on life insurance with a whole-of-life continuation element.
The total cost of this policy over the 20 years amounts to €22,068 (€91.95 x 12 x 20)
But there is a guaranteed payout on each life of €25,000.
Therefore, the most Susan will pay is €22,068.
The minimum this policy will pay out is €50,000!
The policy also has a medical-free conversion option.
Let’s look at a couple of scenarios regarding how this policy would work in practice.
Scenario 1
Either Susan or her hubby dies within the 20-year term:
€75,000 Life cover + €25,000 whole of life benefit pays out = €100,000 per person.
If both die within 20 years, €200,000 pays out.
Scenario 2
Both are still above ground in 20 years:
The life cover of €75,000 ends, but the whole life benefit of €25,000 continues for Susan and her husband for free.
On their eventual demise, €50,000 will be paid (€25,000 for Susan and €25,000 for her hubby)
The maximum they will pay is €22,068, but if they keep the policy for 20 years, it will pay a minimum of €50,000.
With the whole-of-life continuation option, you can structure your policy to stop paying for cover when you want to.
The whole-of-life piece of your policy can cover your funeral costs so you don’t become a burden for anyone, or you can leave it to someone in your will.
There’s only one.
You have to stick with this insurer and pay the premiums for your policy term.
That’s it.
Good question, my cynical friend!
As you pay your premiums, the life insurance provider will invest it in the hope their investment return beats the return they have to provide on your life cover.
They also hope many of you will cancel the policy before the free cover kicks in.
Finally, inflation over those 20 years should make the payout easier for the insurer to swallow.
Still, even considering all of this, it’s an attractive product, provided you structure it correctly.
And that’s where I come in.
Complete this questionnaire, and I’ll be right back with a recommendation we can discuss.
Or you can schedule a call here to go through it.
Chat then!
Thanks for reading
Nick
Editors Note: We first published this blog in 2018 and have updated it since
As Ireland's leading life insurance broker, we specialise in comparing the rates and policies from the top five Irish life insurance providers and offering the very best value quotes to suit the individual needs of our clients. Our expertise lies in finding a suitable insurance plan for those with specific needs, be it a particular illness, occupation or claim history, we've got you covered in every sense!
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