I heard a fella on the radio saying you could get life insurance for €11 a month. How much are we paying?
Dunno Mary, I’ll check with Nick, remember that funny lad from Offaly that we liked.
Ah, Johnny, he was a bit of a dose, have you nobody else?
Howaya Nick, Johnny here; how much are we paying for life insurance?
Lemme check….eh €117 per month Johnny.
But Mary can get it off the radio for €11 per month.
Does the radio know you’re both smokers, Mary has diabetes and your family history of heart attacks?
Eh, probably not. I’ll ring you back – thanks.
Mary, he can’t do any better.
I told ya he was a dose.
Paying for insurance is a P.I.T.A.
Car insurance, house insurance, gadget insurance, pet insurance, life insurance, health insurance, the list is endless. It’s all a massive waste of money until you make a claim, and then it’s the most important few quid you’ve ever spent.
I looked at my life cover recently to see if I could save a few bobs, so I thought it would help outline the thoughts going through my head.
The most important step because you’re not going to move to an insurer who charges more for the same cover, so the first thing you need to do is get a comparative quote.
Punch in your details (date of birth, smoker status, type of cover, amount of cover left, years remaining on the policy and hey presto, out pops your new quote)
If the quote is less than you currently pay, you should consider switching.
If not, then to save money, you’re going to have to play around with your current cover. If you’d like some help with that, please complete this questionnaire, and I’ll make a no-obligation recommendation for you.
Be careful here as it can all go wrong if you switch cover purely on price.
Make sure the cover that you’re considering is the same as or better than your current cover. Here are some simple questions to ask about the replacement policy.
Is it a dual life cover?
If it has serious illness cover, are the replacement policy’s definitions easier or more difficult to claim on?
Some older serious illness policies paid out for ALL types of cancer. The newer policies payout according to the severity of the tumour. Be very careful if you have a policy that will pay out for any types of cancer. Do not replace this policy.
Is the serious illness cover accelerated or additional?
As we get older, the pounds get harder to shift, leading to higher blood pressure, increased BMI and raised cholesterol.
So it’s no wonder that life insurance is generally cheaper when you’re younger and fitter.
Unfortunately, this makes it harder to “switch and save”.
If you have suffered any serious health issues like cancer, heart attack or stroke, I can confidently say you’re better off staying where you are.
The loading/increase on a new policy will make your current premium more competitive than an oil-funded soccer team.
If you smoked like a train back in the day and now your body is a temple, fair play, you should get a lower premium.
However, even if you’ve had a social one in the last 12 months or you vape and your GP knows about it, then you, my friend, are a smoker.
If you’ve started to smoke since you took out your current policy – fuggedaboudit, you’re not going to get cheaper life insurance.
Fun fact, even if you vape 0% nicotine e-cigs, you are a smoker for life insurance purposes.
So you still want to switch?
Jaysus, you must have gotten turned over by your current provider. Some shyster sold you that one.
To switch to a new insurer, you will need to complete a new life insurance application form.
Depending on your age, this may trigger the need for one or more of the following:
4 and 5 are rare – really only for those with whopper health issues or who need whopper amounts of cover.
1, 2 and 3 are pretty common if you’re 50+
What I’m saying is you might have to be poked and prodded a bit to switch.
But there might be an easier way.
Your current insurer may let you reduce your cover and get a lower price simply on request.
If you have a conversion option (see above) on your current policy, you can convert it to a new policy – maybe you don’t need so much coverage as you did (kids are grown up, the mortgage is smaller etc.), but you’d like a longer-term.
But, if your insurer has told you “no dice” and you’re happy with all the steps above, and you still want to switch, well then, we should talk.
It’s not like car or house insurance or even health insurance where you can switch the same cover to a new insurer. With life insurance and mortgage protection, you have to start all over again with a new application.
Before they cancel, people always ask can they cash in their life insurance policy.
Unfortunately, the answer is a big fat no.
You see, the insurer keeps your premiums as payment for the protection they offered while they had you covered.
If you had claimed, they would have paid out a big ol’ chunk of change, and for that promise to pay, they pocket your premiums.
Next time, take out a cashback life insurance policy to avoid your premiums going up in smoke if you don’t make a claim.
Pretty simple answer – your old insurer no longer has to pay out if you die or get sick. Your new insurer takes on this risk, and you pay them a few quid every month.
Life insurance is the passing of the risk of financial loss on your death from you to the insurer in exchange for a few quid.
Yes, you can have multiple policies – I looked at this in detail in a previous article:
Follow all the steps above and get a cheaper quote for the same cover.
Amend your cover – you can lower your life insurance premium by:
I can’t stress this enough – life insurance exists solely to replace your income when you die.
Because if you’re dead, you can no longer earn a living (unless poltergeists are in demand).
But your family will still need an income to cope financially.
Let’s say you earn €50,000 and you’ll work for 20 more years.
That’s potential earnings of a cool million.
You die, your family lose that potential income.
Life insurance leaves a lump sum of money to replace that income so your family can maintain a decent standard of living.
Compare your current life insurance amount with your potential earnings.
If there’s a big shortfall, you should review your life insurance.
There are three types of life insurance.
Don’t be fooled into thinking this is for your protection.
It’s for the bank.
You die; the policy clears your debt.
Did you know the bank gets any payout on any serious illness cover on your mortgage protection policy?
As you can see, mortgage protection doesn’t protect your family.
If you want to safeguard your family’s financial future, you need life insurance:
I call it family protection because it will leave a lump sum of money to your family when you die.
They will use this to replace your monthly paycheque.
If you have a mortgage and a family, you should have two separate policies: one to cover your debt to the bank and protect your family.
From me, this is the most important type of life insurance.
It pays you up to 75% of your income if you can’t work for over four weeks.
How long would your savings survive if you were unable to work long term?
What if I told you €50,000 savings would last just 17 months (drawing down €3000 per month)
Do you have savings to fall back on?
If not, you need to consider income protection.
A lot of people still buy long-term 35-year policies.
I think this is crazy.
You could go for a more flexible short-term policy that you can extend without having to answer medical questions.
If you put a shorter-term life insurance policy in place, you can buy more coverage for the same price.
e.g. a €500,000 policy over ten years would cost the same as a €300,000 policy over 30 years.
You should buy cover until your youngest child reaches 25, so if your youngest is 2, you need a 23-year term life insurance policy.
But always add a rolling conversion option –
this lets you extend your policy as many times as you like without answering any health questions, guaranteeing you can get cover in the future even if your health suffers.
Look, it’s possible to save money on life insurance, but if your policy is over five years old, you’re going to struggle unless you got properly ripped off back in the day.
Life insurers are smart. Every year that passes means it’s less likely you can save money, so more likely you’ll stick with them.
And there’s nothing more profitable than life insurance policies that stay on the books long term.
Here’s the link to our financial questionnaire because to save money, you’re probably going to have to rejig your cover. Complete that questionnaire, and I’ll show you how to do so without giving up too much protection.
If you don’t need help and you’re ready to switch, you can get a quote here and apply online.
See you on the other side.
Nick | | nick @ lion dot ie
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