You’ve probably read that title and recoiled a bit with the bang of BS off it.
Maybe you’ve rubbed your chin in contemplation, and you’re thinking, “but sure the whole point of Life Insurance is to give your family money after you give up the ghost.”
Give up the ghost. Kick the bucket. Cash in your chips. Popped off. Snuffed it.
Exit stage left.
Whatever you want to call it.
And yes, you’d be right. It does sound farfetched, but you can buy Life Insurance with cashback. It’s all a matter of knowing a guy who knows a guy who knows about insurance — or knowing a guy who knows how to Google and ended up on this here part of the internet.
And the cashback is a whopping 70% of the premiums you have paid.
With regular Life Insurance, you pay a monthly premium/cost, and you’re insured. This will cover you for either
a) the length/term/years of the policy that you chose (e.g. 25 years) or
b) the whole of your life.
When you kick/sniff/cash/pop etc. etc., your loved ones get a tax-free lump sum to
mask their grief with wads of cash pay for your funeral. The extent of the “wads” will depend on how much insurance you bought.
Term Life Insurance, which is the one with a limit, i.e. a term, is generally less expensive. The insurer is betting you will outlive the policy so they get to keep your money and not have to pay out when you die.
Whole of Life Insurance, as the name suggests, covers your whole life. Because there will be a certain payout, whole of life costs more than term.
Enter Royal London’s Life Changes Option, which is a new type of Whole of Life insurance
Fun fact: Royal London’s brochure for the Life Changes Option has a fetching man in a hat on the cover, with the slogan ‘Giving you a whole lot more.’ He has a stack of hats in front of him.
Who wouldn’t want a stack of hats?
That’s how you know it’s legit.
No, but in all seriousness, this is a pretty good policy choice. I’m going to explain the ‘why’ of it in a minute once I stop slagging the pile of hats.
Marketing eh (👋 marketers, you know I ♥ you)
So the Life Changes Option is a Whole of Life policy – which means it covers your whole life and is guaranteed to pay out, presuming you keep paying your premiums and don’t do something complete bonkers to nullify it.
Okay, so it’s not quite as sound as it sounded. Remember: insurers are there to make money, not to line yer pockets.
We’re about to give it a good sniff to check it out.
So, if you take out the Life Changes Option with Royal London and pay your policy for at least 15 years, you can choose between two options:
However, the Cashback Option is 10 per cent more expensive, so you’re gonna pay more for this luxury.
The longer you continue to pay your premiums before stopping (let’s say 20, 25 years) the higher the claim or cashback will be.
Don’t worry; we’ll look at examples now in a tick.
With this one, the revised amount takes into account the number of premiums you pay and the number you would have got presuming you would have lived to be 100. It’s based on a formula of original cover amount x (amount of months you have paid for / amount of months you could have paid for up to age 100).
Did that make sense to you? Nope, well Royal London doesn’t care so you just have to accept it.
An example, forthwith.
Tom, aged 50, takes out €80,000 Whole of Life Insurance with the Life Changes Option. After 15 years, Tom stops paying the premiums and gets free cover of €24,000 for the rest of his life. Like so:
It’s a bit more complicated for couples because the age of both partners come into play around who is younger (and further from 100).
The amount you get back will be 70 per cent of the premiums you have paid so far (excluding the Government levy at 1 per cent).
An example, using Tom above, will clear things up.
He paid €110 per month for his €80,000 cover for 15 years i.e he paid premiums of €110 x 12 x 15 = €19,800.
Tom can cancel his policy, and Royal London will pay him back €13,860 (70 per cent of his premiums) in cold hard cash.
Just wait until all of civilisation live in flesh-robots and are created in artificial wombs. Royal London are gonna be so pissed about this ‘100+ policy’.
Look, I don’t know how many of us are going to live past 100, but what I do know from the papers is that the secret to living that old is to avoid men and drink a whiskey a day.
Either way, if you live past 100, the premiums are free. Why? Because that’s the cut-off for the calculations above.
Sure, it won’t be the full shebang, but it can be an option if your financials are under pressure or if you’re happy with the amount of cover you’re leaving behind.
The other insurers have a minimum age of 40.
Again, this can be a bit complicated, so make sure you know what you’re doing. Talk to a professional, i.e. me.
If you’re diagnosed with an illness that has no cure and which will kill you within 12 months, the policy will pay-out.
Helping Hand gives one‑to‑one personal support from your own Nurse Adviser from Red Arc who can help you and your family cope with the effects of illness or bereavement.
As you appreciate from reading the above, Life Insurance with a guaranteed cashback is going to have higher initial premiums than term life insurance.
Because 15 years from now, you can get your hands on 70 per cent of the money you paid.
Let’s take Fiona, a 40-year-old buying €250,000 worth of cover. She wants cover until age 90.
This could cost her €60,000 in premiums but will pay out nothing if she celebrates her 90th birthday.
This could cost her €183,600 in premiums (to age 100) but there is a guaranteed payout of €250,000
And at any time from age 65, Fiona can cancel the policy and get back 70% of her premiums.
This could be a game-changer.
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