Making Cents: Life and death lessons - covering all the bases

More than 70% of Irish people surveyed recently said financial security for their family was extremely or very important, but more than a third of respondents did not have life cover, writes Gráinne McGuinness.

More than 70% of Irish people surveyed recently said financial security for their family was extremely or very important, but more than a third of respondents did not have life cover, writes Gráinne McGuinness.

It is a situation Sarah McGurrin of Orca Financial Ltd sees all the time, and she said customers should think more about how beneficial cover would be if the worst should happen.

“It makes such a difference to your life,” she said. “What we say to customers is that we cannot take the emotional hardship away for you in the event of a death, it is traumatic, but we can help with the financial toll it can take on a family.

“Especially if it is the breadwinner. Yes, you can get social welfare but it is only about €200 per week; it leads to a huge drop in lifestyle. That is one of the main reasons to have life insurance, to protect your financial dependents. 

"If you have children, you want them to be able to maintain the same level of lifestyle in the event of your death.” She said there are misconceptions that put people off getting cover, particularly around the cost.

“We asked what percentage of your overall income you should put towards knowing you have that financial security,” she explained.

“The average came in at 6% but the reality is that the cost of life insurance is probably .5% of your income, if even that.” There are ways to manage the cost of cover.

“If cost is a factor, cover the immediate risk. That would be one of my main tips,” Ms McGurrin said.

“If the immediate risk is to cover you and your family and you are restricted on cost I would say look at a five-year or a 10-year term.

“Let’s get us through the immediate risk and we can put a conversion option on at the end that says in five years’ time, the premium will be more expensive but we can convert over without needing any medical evidence.” 

The majority of survey respondents prefer to deal with banks but Ms McGurrin points out that brokers can help you get the best deal.

“We can shop around and price- match for you. If cost is prohibitive, shop around. We are all well used to ringing around for our house or car insurance — it should be the same with life insurance.

The survey found 36% of those who think that less than 80% of life insurance claims are paid out in Ireland consider life assurance a poor investment. It is no wonder, with that statistic, but in fact the percentage of claims paid in Ireland is far higher.

“We are all used to hearing stories, but the reality is the claims history in Ireland is really, really good,” she said. Life insurance companies make their claims histories available and brokers can also get the information, so potential customers can check the insurer’s history before committing.

There are a number of policy types available, including whole-of-life at the upper end, but term cover will be the best option for most people.

“A whole-of-life policy covers you for the rest of your life but it is expensive. 95% of people will go for a term policy because it is cheaper. 

It has a term attached, so you are covering the time your family is most at risk and after that, the need for cover may be only small.

“The usual time for cover is between 30 and 65, often when there are children and you are also probably earning the most amount of money and can afford the premium.” 

Smokers and those with complicated medical histories can be put off even trying, but Ms McGurrin said there will usually be an option available.

“The reality is for a smoker, your premium is double, there is nothing we can do about that.

“But for people with medical histories, you would be surprised what we can get. I’ve had people think they won’t get policies and we have got them through. 

"This is another reason to shop around, because different companies will view certain illnesses more strictly than others. You might have an increased premium but again, cover your immediate risk. 

"If you’re a smoker and the cost is prohibitive then we would say let’s look at getting cover for now and reassess down the line.”

Deal of the week

Timed to coincide with the busiest renewal period for health insurance, laya healthcare is running the Free Kids Offer, with potential savings of hundreds of euro for families.

This new offer means that parents only pay for one child’s health insurance and the rest go free on Essential Connect Family and Essential Health 300 schemes, no matter how many children they have.

The offer is available until March 31. For families of two adults and two children, opting for laya healthcare’s Essential Connect Family will bring a total saving of €374.32.

“We’re delighted that families can avail of additional savings with our Kids Go Free offer” Dónal Clancy, managing director, laya healthcare, said.

The plans provide hospital cover (both public and private) and include three free visits to GPLive along with a home prescription service and unlimited phone access to GPs, nurses and physios.

Phone [phone] or see layahealthcare.ie.

If there are any consumer issues that you’d like Gráinne to address or if you have problems that Gráinne could help with, she can be contacted at [e-mail].