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Are you paying €3,000 too much for insurance?


KBC Bank

KBC Bank

KBC Bank

Irish banks are charging as much as €3,000 more for life cover than brokers are, according to a new survey.

The survey, by the life assurer Royal London, found that you could pay pay as much as 21pc more a month for life assurance if you buy it from a bank instead of a broker. This could add an extra €3,067 to the cost of a policy over 30 years.

Royal London checked the price of various life assurance policies sold by AIB, EBS Building Society, KBC Bank and Permanent TSB. It then compared those prices to the cost of similar policies sold by brokers.

Life insurance pays out a lump sum or regular income to your dependents should you die while the policy is in force. A 35-year-old non-smoker could pay €23.79 a month for a 30-year life insurance policy of €200,000 were he to buy it from a bank, according to the survey. However, a broker could charge €19.63 a month (about 21pc less) for a similar policy. The pricier monthly premium charged by the bank would add an extra €1,500 to the cost of the cover.

A couple taking out mortgage protection insurance (which repays your mortgage should you die before repaying it) to cover a 30-year mortgage of €500,000 could pay €55.65 a month were they to go through a bank, but €48 a month were they to use a broker - assuming neither partner smokes, according to the survey. Going with a bank instead of a broker could therefore cost this couple an extra €2,754 over the lifetime of their policy.

Were the same couple to buy a 30-year life insurance policy of €500,000, they could pay an extra €3,067 for their cover by using a bank instead of a broker. In this case, the survey found that a bank could charge as much as €81.57 monthly for cover; while a broker could charge €73.05 monthly.

The main reason banks often charge more for life insurance than brokers is because they are usually tied agents - so they can only offer you the products of one company, according to Joe Charles, a spokesman for Royal London. Most Irish banks are tied to Irish Life for life assurance, apart from Bank of Ireland, which is tied to New Ireland.

"Brokers can shop around," said Mr Charles. "They have access to multiple life companies' products and prices."

As a result, brokers will often know - and be in a position to offer you - some of the best deals and discounts on the market.

When asked to comment on the Royal London survey, AIB, EBS and KBC (which are tied to Irish Life) said their prices for life insurance were "competitive".

"Looking at price alone ignores the fact that protection plans across the market vary in terms of the quality and benefits," said a spokeswoman for AIB. "For example, Irish Life plans include additional benefits not included in all protection plans offered by competitors."

All the same, with savings of as much as €3,000 up for grabs, it could certainly cost you to blindly stick with your bank when buying life cover. By choosing a broker who offers you the choice of a wide range of life insurance products on the market (including those sold by the banks), you could save yourself about €100 a year - more if you're buying a number of products.

Choosing a bank over a broker when buying life cover isn't the only thing which could push up the cost of your insurance. Your habits - as well as any illnesses or medical conditions you have - also come into play.

What habits will cost

me with life cover?

Smokers could pay as much as 50pc more for life cover than non-smokers, according to John Geraghty, managing director of the online brokers, LABrokers.ie. "A non-smoker is generally someone who has not smoked any tobacco products in the past 12 months," said Mr Geraghty.

Similarly, you could pay three times as much for life cover than a teetotaler would - if you have a history of heavy drinking. You could also struggle to get insured.

When you apply for life cover, your insurer will ask you how many units of alcohol you typically drink a week. "If your weekly consumption of alcohol is above certain limits, you may not be able to get cover," said Mr Geraghty. "If you have suffered from alcohol dependence, you may not be able to get cover until a year has passed since you stopped drinking."

After that year, you may be able to get cover - but at three times the price charged to someone who does not have a history of alcoholism or heavy drinking. "This 300pc loading could decrease gradually over the years to 50pc as certainty of recovery becomes apparent," said Mr Geraghty.

Adrenaline junkies will also pay more for life cover - because of the high risk of accidental death. So a fondness for boxing, diving, motor racing, mountaineering, parachuting, hang-gliding and pot holing could lead to a higher premium.

Another thing which could push up the cost of life insurance is your weight. Overweight people can pay more than twice the price for life cover as slim people do. Insurers look at your body mass index (BMI - your weight in kilos divided by your height in metres squared) when you apply for life insurance.

"Insurers would expect you to fall within a 'normal' BMI range," said Mr Geraghty. "If you go beyond this, you could see your premium increase by between 75pc and 225pc. If you are underweight, but with no other underlying medical or mental condition, you can also pay around 50pc extra for cover, depending on by how much you are underweight."

You could struggle to get cover at all if seriously overweight.

What about illnesses and medical conditions?

There are a number of medical conditions that you might consider manageable, but which could still see you either paying over the odds for life cover - or having insurers turn you down. These include anxiety, asthma, Crohn's disease, coeliac disease, raised cholesterol, diabetes, depression, epilepsy, hypertension, and stomach and thyroid disorders.

People with diabetes often struggle to get life and mortgage protection cover - particularly if it is type 1 diabetes.

"There are many factors that insurers say they consider when looking at type 1 diabetes - not just the fact that the person has diabetes," said Mr Geraghty.

"For example, the insurer claims that they consider the current age of the applicant, the number of years since the individual was diagnosed with type 1 diabetes, and how well he is controlling the condition.

"They would also claim they take into account factors like raised blood pressure, cholesterol, family history of cardiovascular disease - as well as whether the individual is a smoker or not. Obesity would also be an important factor."

If you have poorly managed type 1 diabetes and are at risk of falling seriously ill (because you are a heavy smoker perhaps or have a family history of heart disease), you will probably find it hard to get life cover. You could get insured if you manage your condition well - but at a price.

But even if you are healthy, sporty and have type 1 diabetes, your premium can be loaded by as much as 700pc - which can represent over 10pc of the purchase price of a house.

Insurers certainly have themselves well covered with life insurance.

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