Life Insurance FAQS


Life Insurance - What is it?

A Life Insurance and Life Insurance mean the same thing and in many contexts the words are interchangeable. We will use the words 'Life Insurance' as this is the term used by the Insurance Institute of Ireland who lead in setting professional standards, education and training in Ireland. A Life Insurance policy pays out the amount of Life Cover as a tax- free lump sum, whether you die on the first day of the policy or the last. The amount payable on death is fixed at the outset and stays the same throughout the duration of the policy. You simply choose the amount of life cover you need and the length of time for which you need it for. Your family can use this lump sum to cover any expenses they may have - for example funeral expenses or other debts. They could also invest it to provide a regular income.

If you are taking out an interest only mortgage then you can use a Life Insurance policy as collateral.

The benefits and the amount that you pay under this type of Life Insurance policy is that the amount you pay and the cover you have is guaranteed and does not depend on investment performance.

There is another valuable option you can include on your policy and it is called a conversion option. This is discussed below in "What other Life Insurance option can I choose?"

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Life Insurance- What protection can it provide?

In the event of death, the proceeds from a Life Insurance policy can be used to provide financial security in the following ways:

  • To cover an interest only mortgage.
  • For your family or dependants.
  • To provide funds to repay business loans.
  • To protect profits in the event of the death of a Key Person in your business.
Many companies also provide an upfront payment of your cover if you are diagnosed as suffering from a Terminal illness. A Terminal illness is a condition which in medical opinion is highly likely to lead to death within 12 months.

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How long do I need cover for?

If you have a young family or plan to have more children, you may need need life cover until your youngest child has left school or college. This could mean a term of 20 to 25 years.

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How much cover do I need?

A Life Insurance policy pays your estate an amount of money if you die during the time limit set out in the policy.

For Dependants:

Protection needs are individual and they vary widely from one person to another. For example, if you have a family then the need to protect your children against a sudden loss of income should cease when they become financially independent. Some children leave school at 16 whilst others will continue with full time education until well into their 20's. You will have to make a realistic assessment of the length of time for which you will need protection.

Since the objective of most forms of protection is replacement of income in the event of death, the size of the income required to meet future needs and expectations determines the amount of cover required.

The following are specimen illustrations of the gross capital sums required to produce a desired net weekly income for your dependants.

Assumed Gross Investment Rate
WEEKLY INCOME* 3%p.a 5%p.a 7%p.a
EUR100 EUR230,444 EUR139.209 EUR100.105
EUR125 EUR288.055 EUR174.012 EUR125.132
EUR150 EUR319.076 EUR192.751 EUR138.607
EUR175 EUR403.277 EUR243.616 EUR175.184
EUR200 EUR460.888 EUR278.419 EUR200.211
EUR225 EUR518.499 EUR313.213 EUR225.239
EUR250 EUR576.110 EUR348.023 EUR250.263
EUR300 EUR691.331 EUR417.628 EUR300.316
EUR350 EUR806.553 EUR489.233 EUR350.369

* Net of Dirt Tax
The illustrated capital sums are calculated assuming:

  • the money is deposited earning the interest rates shown with the interest credited half-yearly,
  • DIRT is paid half-yearly and..
  • The weekly income is payable continuously without erosion of the capital sum.

Remember, if additional payments (such as pensions or social welfare payments) will be available in the event of your death, you should take this into account when calculating the amount of your income you need to cover.

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Can a Life Insurance policy be used to cover a mortgage?

Yes.

If you are taking out an interest only mortgage then you can use a Life Insurance policy as collateral.

If your loan is a repayment type loan, where the amount borrowed goes down gradually as you make your repayments you can use this type of cover if you wish, but you might like to consider a more cost effective solution in a product called Mortgage Protection.

You only need one policy to protect your loan. Mortgage Protection (the cheapest form of cover and the one most people use to cover a repayment mortgage) or Life Insurance. You do not need both.

It appears that some banks love confusing consumers by telling them they have to get a Life Insurance policy in place and later that they need a life insurance policy. Life Insurance and life insurance are the same thing but they are mainly used to cover an interest only loan. A Life Insurance policy won't provide enough to cover your loan and your family. It is a good sales tool and results in higher premiums for the seller but we don't recommend it. Let the bank have the minimum amount they need to cover your loan (they have control of the policy) and look after your own needs for Life Insurance as a separate issue. We have discussed this in newspaper articles which you'll find on this site. If your loan is a repayment type of loan and most are these days then go for the cheapest form of Life Insurance called mortgage protection.

If you are in good health then you should apply for cover a max of three months before you need your loan cheque.

You need to hand the policy to your lender about a week before you need them to give you the loan cheque. You do not need the policy when you are signing or house hunting.

If you have not finalised a closing date for your loan and are unsure of the date you would like your policy to start from, then simply write the words 'Start Date To Be Advised' along the top of your application form. In this way we will process your application but the insurance company will hold off issuing your insurance policy until we receive your instructions giving us a date to proceed. The advantage is that all paperwork is out of the way. Your lender will generally require the policy document a week before you need the loan cheque

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How do you discount my Life Insurance premium?

LABrokers is paid a commission for setting up your Life Insurance policy. However, because we take less commission and have volume discounts we use this to your advantage by arranging your policy at a lower price. In 1997, LABrokers was the first Irish insurance broker to arrange a policy over the internet (our first client was from Tralee, Co. Kerry) and over the years our ability to discount and to obtain bulk discounts from insurers means we can get you exactly the same policy as you would get elsewhere but cheaper than if you went directly to your bank or the insurance company. We realise as a customer you require an excellent price on your insurance and ongoing service in the year's to come is also important to you. In this respect we have an established track record and we are committed to meeting these expectations in the future.

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What happens if I stop paying premiums?

With LABrokers you can cease your policy at any time (if your policy is used as collateral then you need the assignees permission before you cancel the policy). If you stop paying the premiums, your life cover will also stop.

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What if I'm in a hurry to get Insurance cover?

When returning the form please write the words 'Urgent' along the top of the form and let us when you need cover by and Contact Us via our online form or by phone.

If you can scan your application over to us we'll act immediately and there is no need to post the form to us.

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Life Insurance - How long does it take to get cover?

We will process your application as soon as it is received. The vast majority of correctly completed applications are ready to go the same working day and in some cases it can be as quick as two hours.

If the applicant has disclosed an adverse health history (e.g. high blood pressure, a recent operation etc) on the application, then the insurance company may in some cases contact the client directly for more detailed information of the condition. In some cases a GP report may be required (at no cost to the applicant). Doctors generally reply within 10 days. So a typical decision is obtained in 12 days.(full details see question below 'Is a medical required?'.

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How do you update me on my Life Insurance application?

From when we receive your Insurance application we will email you with regular updates to keep you fully posted.

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How do I receive my Insurance policy?

Once you have been accepted for Life Insurance cover by the insurer and when you advise us of a start date, the policy documents are posted directly to you by the insurer. In most cases we can also e mail the documents to you. The contract is between you and the insurer with the insurer issuing the policy documents and providing cover. The insurer also handles your premiums not LABrokers.

When you take out an Insurance policy you are entitled to a 30-day inspection period. If you are not completely satisfied during that period, you can cancel the Insurance policy without any questions being asked and you will receive a full refund of any payments made.

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Life Insurance - Who can be covered?

You can take out a Life Insurance policy on yourself or add your spouse or partner.

  • A Single life insurance policy covers one person only.
  • On a Joint life insurance policy two persons are covered, the amount of cover would be paid out on the first death, and the policy would finish.
  • A Dual life insurance policy covers two persons independently. A benefit can be paid on an individual policy without affecting the other persons cover. If for example both persons were to die in an accident then both amounts would be paid to their children / next of kin. A Dual Life Insurance policy is cheaper than buying two separate 'Single' Life Insurance policies because the insurance company will only charge one policy fee.

Note: On your quote, premiums quoted are total premiums and not per person.

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What other Life Insurance option can I choose?

With Life Insurance there is another option you can choose:

Conversion option - In return for a small extra premium you can include an option which gives you the opportunity of purchasing cover again without the need for medical information or tests.

Without it, the contingency of ill health could make the acquisition of new Life Insurance in the future either very expensive or impossible.

The cover under the new Life Insurance policy can be the same or less than the cover on the old one. The amount you then pay will depend on your age at the time of exercising the option and the type of Life Insurance policy to which you continue with. You could for example take out a life policy that will last another fixed term or you could take out a Life Insurance policy that could last for the rest of your life.

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Life Insurance - How is the premium calculated?

The premium is dictated by your age, whether you smoke or not, the amount of cover you require and over how many years it is required.

The amount you pay is Guaranteed not to increase for the whole period for which you are covered unless you choose the Inflation Option. It is worth noting that unit linked Life Insurance products offer no such guarantees and are subject to a review - meaning the life company can ask you to pay more for your life cover or reduce your benefits. All life insurance policies that LABrokers quote for are Guaranteed cover at a guaranteed price.

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Life Insurance - Can everyone get it?

As with all types of Life Insurance, you will have to fill in an application form in which you will have to answer certain medical questions. In a very small number of cases, you may have to have a medical examination or the life company may ask your doctor for a medical report (the insurance company will pay any fees due directly to the doctor). If you already have a medical condition, there will probably be some restriction in cover. Most people who apply for this cover get it at normal rates (i.e. as per quote).

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Smoker or non smoker?

There is a considerable difference in the amount charged for Life Insurance for a smoker versus someone who doesn't smoke. Many people will have given up smoking as their New year's resolution and are currently not smoking. In the eyes of an insurer a non smoker is a person who has not smoked tobacco in the past twelve months.

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Is a medical required?

In the vast majority of applications – No

As with all types of Life Insurance, you will have to fill in an application form in which you will have to answer certain medical questions. In a small number of cases, especially for applicants with a serious or ongoing medical condition, you may have to have a medical examination (the insurance company pays this fee directly to your doctor) or the life company may ask your doctor for a medical report from records. However, most medical requirements have been replaced by more recent innovations such as more detailed medical questionnaires, nurse medicals (where a nurse calls to you) or tele-underwriting (where an underwriter with experience in the type of illness / condition you have disclosed contacts you by phone to obtain more detailed information). All medical information is completely confidential. LABrokers does not have access to these files. If you have a serious medical condition, please feel free to call us on 01 2810577 Mon to Fri 9am to 1pm and 2pm to 5pm before you apply. Most people who apply for this cover get it at the rate quoted. If the insurer cannot accept you at the premium quoted then they will make you a written offer and it would be up to you to decide whether or not to accept.

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What about above average risks?

Insurance companies differ on their views of a risk. If your health is not the best, it may be worth while contacting us before you submit your application.

The above also applies to those who are involved in hazardous pastimes or sports such as racing, diving, mountaineering, potholing or recreational aviation.

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How do I apply?

You can request a free Life Insurance quotation online. The results will show the cheapest provider found.

If you wish to proceed further, simply click on the link and complete the application form.

The application form should be returned to SCANNED or posted to LABrokers, Freepost, FGSS10,Newcastle, Greystones, Co Wicklow.

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