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Life insurance: It's life or debt for Generation X

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If you are married or in a relationship with dependent children, it would be cheaper to opt for a joint life policy that would pay out if either of you dies

If you are married or in a relationship with dependent children, it would be cheaper to opt for a joint life policy that would pay out if either of you dies

If you are married or in a relationship with dependent children, it would be cheaper to opt for a joint life policy that would pay out if either of you dies

Life insurance is generally aimed at parents of young children or the sole or primary income earner in a family.

If that person dies, a life policy will pay out a lump sum to any dependents that will help towards financially supporting them or perhaps if there are loans or other debts left behind they could not be reasonably expected to pay off.

Of course, for people over the age of 50 with children who are likely to be older or nearly grown up, the need for such cover will not be as urgent. But with more parents having children later in life, many of them now in this age bracket may still need a reasonable amount of cover.

Term life insurance, which insures you for a specific length of time for a specific amount, is generally far cheaper and simpler than whole-of-life insurance, which insures you for your whole life and for which the premiums may increase substantially the older you get, particularly after the age of 65.

“In crude terms, you’re generally less likely to die in the early years so these are cheaper, while a policy that stretches into your 70s will cost considerably more,” says Ciaran Phelan of the Irish Brokers Association.

“Whatever age you take out term life cover, it’s important to match both the level of cover and the term to your expected risk,” he adds.

“For example, if you’re 56 and still have twins aged 12, you might select a term of 12 years to see them through college and a sum insured that will cover the cost of getting them to that point. To save cost, the cover could decrease over the 12 years as the funds needed will reduce.”

According to the National Consumer Agency’s recent life insurance survey from last February, a 50-year-old individual would pay between €330 to €400 a year for €120,000 of life cover over 10 years, or about €4,000 over the life of the policy.

If you are married or in a relationship with dependent children, it would be cheaper to opt for a joint life policy that would pay out if either of you dies. A dual life policy would pay out if both of you die and, unlike a joint policy, would continue to cover the surviving partner if just one of you dies.

However, judging by the NCA survey, the monthly cost of dual life cover isn’t significantly higher than for joint life cover — usually less than 5pc.

But a factor that continues to have a huge influence on the cost of life insurance no matter what your age is whether you are a smoker or non-smoker. In most cases, the premium is double that for smokers compared to non-smokers for someone aged 50. For example, Aviva quoted a €63.39 a month premium for a 10-year/120k policy for a smoker compared to €33.60 for a non-smoker.

Although this was the most expensive quote in the NCA survey, Aviva also claims to be the only life insurer offering term life cover up to the age 89.

You can add extra benefits to a term life policy, such as serious illness insurance, but many folks without children or any other dependents may often choose a standalone serious illness policy to ensure they have the means to afford health care should they need it, according to Mr Phelan.

It’s worth noting that towards the end of a term life policy, you can ‘convert’ it into a new policy without having to prove that you are then in good health. According to the NCA, the premium for the new policy will be based on your age when you convert it — but you usually have to be under 60 or 65.

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If you want whole-of-life cover, there are a variety of types, but the most popular is a unit-linked policy where your insurer invests your premium into a fund and manages it with the aim of ensuring there is enough to pay out the policy when the time comes. However, the value of the fund may fall as well as rise, which means that you might have to pay higher premiums at a later stage.

But you can also get a policy where your premium is fixed and your benefit is set at an agreed level. You will generally pay much more throughout the period of cover for this type of policy than for one where the premium is not fixed.

The NCA survey shows that three insurers — Zurich, Friends First and Irish Life — quoted for a whole-of-life policy for customers aged 50, with the monthly premium for a fixed amount of €120,000 ranging from €144 to €220 per month for a male or female non-smoker.

The jump in premiums for smokers is not as pronounced as it would be for term life policies, with an average of a 45pc rise.


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