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How To Arrange Life Insurance (for less)

September 6 2017 6 min read Blog Life Insurance

 

mortgage protection is better than life insurance

Answer me this:

What would affect your family more?

  • Your death tomorrow
  • Your death in 25 years

It’s tomorrow isn’t it?

In 25 years, your children will be financially independent.

And you will (hopefully) have substantial savings that your family could use to replace your income.

A clever way to arrange life insurance

So why buy a life insurance policy that pays out the same amount now…as it will in 25 years?

Seeing as you need more cover now than you will in 25 years time.

Let’s say you’ve worked out that you need a life insurance policy of €500,000 over 25 years.

You figure €500,000 is enough to leave behind to care of your family should you leave us unexpectedly.

  • If you die tomorrow, your family will receive €500,000.
  • Should you die in 5 years time, your family will receive €500,000
  • In 24 years, 11 months, and 30 days…your family will also receive €500,000

It doesn’t make sense for your family to get the same payout in 25 years as they would today.

So is there an alternative?

I think there is…..follow follow follow….me

Buy mortgage protection instead of life insurance!

Not many people know this but you can buy a mortgage protection policy at any time, not just when you’re buying a house.

You see mortgage protection is just another name for a type of life insurance that reduces over time.

Mortgage protection = reducing term life insurance

Using our example above but replacing life insurance with mortgage protection:

  • You die tomorrow, your family receives €500,000.
  • You die in 5 years time, your family received €400,000 as cover reduces over time
  • You die in 24 years, 11 months, and 30 days, your family receives €50 (nothing basically)

Using mortgage protection creates a new source of money when your family need it most.

In the future, when they’re financially independent, they don’t need a massive payout.

Buying mortgage protection instead of life insurance does exactly what you need:

It protects your family at the time of their lives when they are most vulnerable

And the beauty is…

IT COSTS A LOT LESS THAN LIFE INSURANCE

Here’s a client story:

He thought a €500,000 15 year life insurance policy would be best for his situation.

Hi Nick,
I used your price comparison.
Given my assets & pension cover etc, I would like to arrange life insurance for €500,000 for a 15 year period.
(while we still have kids at home)
Both 46, full health etc.
You quoted €117 per month.
Let me know any other key points to consider.
Thanks
Evan

But did Evan need to arrange life insurance or would mortgage protection work just as well (at a lower price).

Using mortgage protection has two big advantage

  1. Buy more initial cover. €1m mortgage protection is €126 per month (€9 more than €500,000 life insurance)
  2. Reduce your outgoings but keep your family safe. €500,000 mortgage protection is €62pm (€55 less than life insurance)

Evan was happy to go with the €500,000 mortgage protection.

And he used the €55 savings to buy himself an income protection policy which he initially thought was outside his budget!

What are the disadvantages of buying mortgage protection instead of life insurance?

Using mortgage protection instead of life insurance means you can:

  1. Buy more initial cover for the same price
  2. Buy the same initial cover over a longer term at the same price
  3. Buy the same initial cover at a lower price
  4. Buy extra cover such as serious illness or income protection with the savings

But what are the disadvantages?

  1. You can’t extend your cover – i.e no continue cover option
  2. The payout is small in the last few years of your policy
  3. If you add serious illness cover, this cover also reduces.

Anything else I need to know?

At the moment Zurich Life and Royal London are offering 15% off their mortgage protection premiums so it’s a great time to use this strategy to protect your family.

Get an instant quote here

Friends First offer dual life mortgage protection which means a payout on the first death and the second death. All other insurers pay out on first death only.

Over to you…

Don’t worry if you’re finding it difficult to get your head around this.

I know it’s complicated.

If I have melted your head, I am sorry…

…but give me a shout using the form below or call me on 05793 20836 and I’ll answer any questions you have.

Nick McGowan
lion.ie | making life insurance easier

 

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