4th February 2020

LIFE Insurance … Should Definitely get your No. 1 Vote! 

The current general election fever will probably bore many people to death so they better have their life cover! 

Unfortunately, life insurance isn’t the most exciting subject either and most people’s eyes glaze over at the mere mention of it. This is a big reason why are Irish people are so ‘undercovered’ when it comes to this critical financial product. The stats are frightening….

1 in 2 adults aged 26 – 65 have no life insurance or mortgage protection cover.

Only 1 in 12 parents (8%) have life insurance and death in service benefits. Of the people with death in service, almost 1 in 2 don’t know how much cover they have.

Almost every second parent (45%) with children under 17 have no life insurance or mortgage protection at all.

*Source: Irish Life 2016 

Yet life insurance is arguably the most important financial product everyone should have as it provides a huge financial safety net to a myriad number of people depending on the type of cover one has. At every stage of life, people require different types of cover be it medical insurance for their whole life or life insurance which typically kicks off when you start having kids to when you retire. At the latter stage the kids should have long left the house (not so prevalent sadly in the current tough house buying climate) and your mortgage should be cleared and all loans likewise. Even after retirement, it is very useful to have Funeral Cover, another type of life cover, as it enables all your family and friends to send you off into eternity without dipping into their pockets at a time when money could be tight as hard to have much of a farewell party on the old-age pension.

In looking at life insurance and its various forms, here are some guidelines that will give you a good steer on it all…

Love your family – well what will happen to them if you or your partner pass away. Here are some of the items that still will need to be paid for:
  • Mortgage Loan (taking out Mortgage Protection life insurance is mandatory so this should be cleared if you have this cover in place)
  • Car loans if applicable not to mention house and car insurance.
  • Domestic bills such as gas, phone, electricity, etc 
  • Medical bills e.g. all those trips to GP with kids.
  • Gym memberships.
  • Pensions.
  • School and ancillary activities (holiday camps, sports clubs, etc) fees.
  • Educational fees such as school and university fees not to mention grinds which are all the rage nowadays.
  • Private healthcare e.g. VHI, Laya, etc.
  • Grocery bills (according to the CSO Household Budget Survey – the typical Irish household spends €123 weekly just on food).
  • Clothing and footwear.
  • Holidays.

A level term life insurance policy will ensure all these costs can be taken care of and the earlier you take out the cover the cheaper it is.

Irish people aren’t healthy ….a recent Lancet medical journal study found that Irish men already have the highest body mass index (BMI) – a key measure of being overweight – in Europe, while Irish women rank third. It is therefore not surprising that heart disease is the most common cause of death in Ireland. Approximately 10,000 people die each year from it. In short, the odds are not in a lot of people’s favour so the risk of dying younger than they anticipated, is pretty high. 

Having life cover in place will help your dependents big time if sadly the above stats hit home for you and if one can afford it, it is always very prudent to have a  standalone serious illness policy. Too often that heart attack or bout of cancer puts people on the back foot financially ( a 2019 Irish Cancer Society Report found that the cost of cancer diagnosis typically sees patients suffer a further €756 to €1,000 in additional costs per month ).

Cancer is way too prevalent in Ireland particularly in ‘sniper alley’ i.e. the age group 55 years to 75 years as per below so life insurance and serious illness and indeed cancer cover are very important.

Funerals are not cheap. In the UK, the cost of a basic funeral has risen by over 80% over the past decade according to SunLife research and it’s rising here too with the last survey by An Post in 2016 showing an average cost for a standard funeral here of €4,062. We are renowned when it comes to doing funerals as we like to ensure we give our family and friends ‘ a good send-off’. Therefore, if you want to make sure you get a decent burial and that your family and friends will be drinking wine and not water at the post-funeral reception  - having a small funeral cover policy is important.

Expensive it is not…. If you look at the chart below which is courtesy of the last CSO Household Budget Survey of 2015 – 2016 ( they do them every 5 years),  it gives a clear picture of average weekly spending for Irish households. So focusing on an item(s) that one could do with a lot less of and ideally have none at all (albeit your sanity might be tested!) of i.e. alcohol and tobacco.  The average household spends €28 per week on them and no doubt this figure is a good bit higher now so let’s say €35 per week or €140 per month.

Yet a typical level term life insurance quote for a non- smoking couple aged 35 for 30 years (up to retirement age at 65 if all the parties deliver on their latest batch of promises!)  for a sum of €250,000 on a dual life basis ( i.e. each individual has €250,000 of cover and if one dies then €250,000 is paid out and the remaining partner still has cover of €250,000) is only €41.23 per month ( even less at only €34 monthly with Low 😊).

If one of the partners smoked, the cost would rise to €60.56 per month (again only €50 with Low ). Either way the cost of a sizable amount of life cover is at the very worst two weeks of expenditure on drink and fags for the couple with a smoker amongst them and only one week for the couple that just sticks to the pints and wine.

We started with a general election theme so it is fitting to end with one and plagiarising the Fine Gael slogan is an apt metaphor for what people who have life insurance can have, namely,  ..’A Future to Look Forward to’. For those who haven’t got life insurance, we might jump across to the UK and use Labour’s campaign slogan from their ill-fated UK election ‘ It’s time for real change’. It might not have worked for them but it will for you if you follow through and get that life insurance cover.