Consumers will save thousands in insurers' price war
A price war has broken out among life insurance companies in a development that could save families thousands of euro on their policies.
Intense competition has driven down prices to the extent that a family can save between €2,000 and €7,500 over the 20- to 30-year term of a life policy.
Life insurers are competing harder to win business because people are no longer investing in pensions and investments due to the economic downturn.
In addition, the fact that people are living longer -- and so fewer people are dying during the term of their policies -- has made it cheaper to provide life insurance.
Yesterday, Caledonian Life became the largest company to slash its premiums on both mortgage protection (a form of life insurance that pays out if the mortgage holder dies) and life insurance.
Ciaran Phelan, chief executive of the Irish Brokers' Association, said a price war had broken out.
He explained: "The significant reduction in life cover costs across the market is a reflection of greater longevity, coupled with a more competitive market environment as other business lines -- such as pensions and investment -- tighten due to the economic conditions.
Mr Phelan added: "Regardless of how this impacts upon product providers, if consumers can get a better deal and save a few hundred euro, then they should go for it."
Figures provided by the National Consumer Agency on its website, itsyourmoney.com, show a wide range of premiums for life and mortgage-protection policies.
A separate study carried out by Caledonian Life showed a price difference of up to €7,500 on a life-insurance policy over a term of 20 to 30 years.
The head of Caledonian Life, Greg Dyer said: "The survey revealed a staggering price differential of up to €7,500 between the most expensive and the cheapest products on the market."
He warned other life companies to drop their premiums.
"The Irish public have adapted to these financially challenging times by taking a more prudent approach to their spending and we believe the market will need to adapt accordingly," said Mr Dyer.
"Cost savings are now paramount to any household budget and providers of financial products increasingly need to take this into account."
Data on the website of the National Consumer Agency (NCA), a state body, showed that the premiums on a mortgage-protection policy for a couple (both non-smokers) varies from €33 to €24 a month.
Over a full 25 years of a policy like this, the €9 difference in the monthly premiums adds up to thousands of euro.
The NCA said a consumer would need life insurance if members of their family or others rely on them for financial or other support.
However, a consumer may not need life insurance -- or they may need less cover -- if no one depends on their income or work or if they have death-in-service benefits through their job or pension plan.