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Beyond the quote: How to choose a Life Insurance provider

June 5 2018 6 min read Life Insurance

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Money, money, money.

It’s a rich man’s world.

Or so sang ABBA on their 1976 pop banger ‘Money, Money, Money’.

When it comes to life insurance, you might think that price is the most important factor. Sure you’ve filled in your details and used an online quote calculator for Life Insurance, and you’ve got a list of insurers with prices listed from cheapest to most expensive.

You’re probably thinking it’s just a case picking the cheapest quote.

As it so happens, it’s not just a case of picking whichever insurer is cheaper.

So what else do you need to consider?

The different Life Insurance products

When you see a list of Life Insurance quotes, you might think that you’re comparing apples and apples – but each policy isn’t the same.

They won’t always cover the same things or have the same benefits. The product type may even be a bit different.

Life Insurance falls roughly into two categories: Term Life and Whole Life.

Term pays out if you die within a certain time period (the term of your policy), whereas Whole Life covers your entire life – presuming, of course, that you continue to pay your premiums. Don’t pay the premium – no Bueno. Term is less expensive as there’s a chance you might actually outlive your policy so the risk to the insurer is less compared with Whole of Life.

Think of it like this: with Whole Life you’re covered for your literal whole life. The chances of you dying during the event of your whole life is 100 percent. You can’t outrun this one.

But with Term life cover, let’s say you’re 35 and you get 35 years’ Term cover. You could outlive your policy by a decade or so, with ease.

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Whole Life is brilliant if you can keep up the premium payments, but it could get pricey when you’re older and no longer working a cushy desk job in the big schmoke – which could lead to you cancelling your policy because you can’t afford the repayments

So which one is right for you?

Well it depends.

And to complicate things even further, there are actually two types of Whole Life Insurance.

I know.

It’s almost as if someone somewhere made Life Insurance so complicated that it seems inaccessible to average folk.

Almost. As. If…

The different types of Life Insurance…part two

Term Life Insurance is fairly straightforward.

Whole Life tends to be a bit more complicated. We looked at the basics in the last section (it’s an assurance policy that you can’t outlive, presuming you don’t cancel it).

But there are different types of Whole of Life Insurance:

Exhibit a. Reviewable Whole Of Life Insurance

  • Reviewed every 10 years and once a year after you turn 60.
  • Your insurer can increase your premium at each review. (Yikes. Remember what I said about it being pricey?)
  • I’ll let you in on a secret: Reviewable Whole of Life is a trap. It will get so expensive that you’ll end up cancelling your policy when you’re older. At that stage you mightn’t be able to get a replacement policy due to your age/health. Don’t touch these policies. If you have one, or your parents have one, advise them to get rid of it while they still can.

In short: you don’t want this.

Exhibit b. Guaranteed Whole Of Life Insurance

  • No reviews and your premium is fixed from the start of your policy.
  • 😊
  • There is no end date to the policy and it can be paid out tax-free to cover inheritance tax.
  • 😊😊
  • Some policies even give you the option of getting 70 percent of your premium back in cold hard cash.
  • 😊😊😊
  • Much better than Reviewable

In short: Guaranteed Whole of Life = good. Reviewable Whole of Life = bad.

Does it have a conversion option?

You know how, up above, I said that insurers like to use jargon to confuse us?

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This is especially true with the conversion option. It’s also called protection continuation, guaranteed cover again, and convertible cover…

When it comes to Term Life Insurance, they all mean the same thing: a medical-free option to extend the term of your cover.

Without a conversion option you might end up in a scenario like this:

You get Life Insurance, aged 37, and in great health. You’re a non-smoker and you dutifully pay your 30 quid a month for the 30 years you chose.

Fast forward 30 years and you’ve been diagnosed with raised cholesterol, high blood pressure, and you’re overweight just when your life insurance is about to expire.

Because of the new health issues, you’ll be hit with a much more expensive premium when you look for a new quote…even worse you may be declined.

You’ll feel like you’ve frittered your money away for the last 30 years.

Ouch…

Unless you had the sense to buy a policy with a conversion option. If you did, the insurer will offer you a new quote solely based on your future age. They can’t ask medical questions so can’t factor in your cholesterol, BP and weight.

In your face, insurance company.

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Moral of the story: always, always, always (to the tune of ‘Money, Money, Money’) buy a policy that comes with a conversion option.

The additional benefits

So here’s the deal: not all the insurance companies are created equal.

Each of them has a USP (an angle, for the non-business folk) that they push so that they stand out from the competitors.

They’re all ducks, is what I’m saying, but ducks with different quacks.

Aviva, for example, gives access to the best doctors. New Ireland has Whole Of Life cover that could pay for itself. Royal London does Dual Mortgage Protection. Zurich has excellent Serious Illness Cover.

It goes far beyond that too.

Let’s look at two of the ducks insurers: Irish Life and Royal London.

If you run a quote on Lion.ie for your average 30-odd year old with no health conditions, a 35 year term, €400,000 cover, and a conversion option, Irish Life will be the most expensive of the six insurers while Royal London will be the cheapest.

Et voila:

how_to_choose_life_insurance_provider

Do you go with the cheapest insurer? Maybe.

It depends.

Royal London’s benefits are:

  • The first month is free.
  • There’s a helping hand benefit.
  • Competitive indexation (a pricing technique).
  • Good Serious Illness Cover, if you’re looking to bundle it.
  • It offers a 50 year policy.

Irish Life’s benefits include:

  • Free Child Life Cover up to €7,000.
  • You can convert it to a Whole of Life policy, down the line.
  • Partial pay-out for pregnancy-related issues.
  • LifeCare benefit.
  • 20 percent additional cover available in the future without underwriting

A single person who intends to live that bachelor(ette) lifestyle might choose Royal London. It’s cheaper and it suits them.

Somebody starting a family might choose Irish Life. Sure, it’s an extra tenner a month but the benefits make sense for their situation.

And that’s the thing: it doesn’t just come down to how much it costs – it’s all the other benefits too.

If all of this is an utter head-melt and you want someone to take the pain away, then I’m more than happy to help.

Over to you…

I’m just a broker standing in front of a potential customer asking you to love me.

That probably works better for Julia Roberts and Hugh Grant.

In all seriousness, if you want someone to crunch the numbers, weigh up the benefits, explain what each policy actually offers, or do it all for you, give me a call on 057 93 20836 or complete this questionnaire.

Life Insurance is never as complicated or expensive as you think!

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Uninsurable: 3 things to know if you think you can't get Life Insurance

Life Insurance might seem like a modern invention – like a lightbulb moment that could have happened in the last century given the rise of corporate banking and massive financial companies.

It actually goes back centuries – the first Life Insurance policies were taken out in the early 18th century and the first company to offer Life Insurance was founded in London in 1706.

It was called the Amicable Society for a Perpetual Assurance Office, which is long-winded but pretty brilliant. Who wouldn’t trust an ‘Amicable Society’ with their ‘Perpetual Assurance’?

Given that was London in the 1700s, modern Life Insurance probably comes with a lot less moustache twirling and tricorn hats.

Life Insurance, as a business, has been developing for centuries – so the vast majority of people can usually get some cover. Here’s what you need to know if you think you’re ‘uninsurable’.
May 29 2018 4.5 min read Life Insurance

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