Life Life Assurance Over 70's

N

newgal

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Just wondering if anyone can help, my parents have been paying into a policy for many years, this is worth virtually nothing now, the orignal sum was for 18k in the event of a death but the repayments have increased so much to maintain this they've had to reduce their cover to only 8k. Is there somewhere independent I can bring them to find out about their options?
 
Is it to cover a particular need? Has the policy any surrender value?

If the answer to both these questions is no, they're probably better just investing the money somewhere or spending it and enjoying themselves.
 
Thanks for that, it's in case one dies before the other - the value on it is virtually nothing, I'll talk to them about cancelling it - they seem to find it hard to believe that they've paid in some thousands of euro and its' gone!
 
Same applies to any insurance though, we pay a fortune over the years for car insurance or house insurance and there is no return, in some ways we should be happier we don't get a payout cos then we would be dead!
 
There must be something wrong here. I have a umber of Life Assurance Policies, some over 20 years old, some originated in the UK and others in Ireland. They are renewed each year and there has been no increase in premiums, even though I have MS. Have you contacted the company that extended the cover as it just does not sound right. Have the parents been advised the Life part has been reduced in the case of a claim
 
Probably a whole of life policy which would have regular reviews especially after a certain age with resulting increase in premium or decrease in cover, not uncommon for this to happen and discussed a lot on here.

Mercman, you may have straight forward term assurance which is a fixed premium.
 
It depends on your policy. The policy will have either guaranteed or reviewable premiums. Whilst the guaranteed premiums stay the same for the life of the policy, reviewable premiums can be changed every, for example, 5 years.

Also, there doesn't necessarily need to be a change in personal circumstances for premiums to be reviewed upwards - it could be down to the performance of the insurance companies investments.

"In case one of them dies before the other", in my opinion, isn't sufficient. You need to see a need and get insurance to fulfill that need.

As an example of what I mean, your parents are likely in receipt of a pension. You need to evaluate their expenses, determine how much of a difference there is between their pension and the required income should one of you die.

Then multiply that shortage by the number of years life expectancy of you both (possibly adding a little for comfort). The number of years life expectancy together with the result of this calculation should be used to select a value and term for your life insurance.

Too many people pick a random, even number out of their heads and a random term - for example, 100,000 for 20 years is a popular policy (although it's impossible that everyone with such a policy has the same needs - or even close).

If their pension is sufficient, in particular if one of them died, then no insurance is needed and you can avoid the premiums which, for a policy with as low a value as your parents, will be covering mostly administration of the policy as opposed to the sum insured.
 
wbbs said:
Mercman, you may have straight forward term assurance which is a fixed premium.
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No, I wouldn't do Term Assurance.Personally I feel that it is a waste of money, to assist in the Life Insurers make profits. They are either whole of life or Joint Life second death Policies.
 
mercman said:
No, I wouldn't do Term Assurance.Personally I feel that it is a waste of money, to assist in the Life Insurers make profits. They are either whole of life or Joint Life second death Policies.
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There's a very valid argument for selecting a term policy that goes to retirement age and investing the difference in premiums between that and a Whole of Life policy in a private pension.

Not only is it possible that the pension pot will eventually exceed the potential payout of the insurance policy, but you'd have access to enjoy the money at a much younger age. A large payout isn't much good if you're both in your 90's - except to leave behind for loved ones.

Insurance companies make as much, if not more, from whole of life policies.
 
marathonic said:
Not only is it possible that the pension pot will eventually exceed the potential payout of the insurance policy, but you'd have access to enjoy the money at a much younger age.
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Tell me, what century are you referring to ?? If persons want to leave money to their beneficiaries surely the easiest and simplest way is to have Life Policies payable after death.
 
Not in the business - I'm a software developer.

As an example of what I mean, a 20 year old non-smoking male can get whole of life cover for €100,000 at a premium of €45.29 per month (it may be cheaper through certain brokers but this is an example).

The average life expectancy in Ireland is 80.3. That means that the average 20 year old can expect to live 60 years (probably longer given advancements in medicine in the future).

The €45.29 per month invested at a, pretty low, 5% rate of return will be worth €206,095.

Now, take a lower rate tax payer (higher would work out even better). The €45.29 per month would work out at about €56 per month net. That would grow to €254,832 over the 60 years - in fact, it'd exceed the value of the whole of life policy after less than 43 years.

If I was in the business, I'd be trying to promote whole of life policies.
 
When you draw down your pension, you can help your intended beneficiaries.

I'm just saying that, whilst a whole of life policy does have it's place - for example, for those that have a spouse for whom they'd like to cover any interest only debt - it is not the be all and end all.

As the figures above show, insurance companies probably make more from whole of life policies than they do from term policies.

Whole of life policies also represent poor value because, unless you index the premiums and sum insured, the value is ate away with inflation. Also, if you do index it, the premium arises by a certain factor more than the benefit every year so, as time goes on, you're paying far too high a premium when you take the sum insured into account.
 
The BROADER issue is that policies were sold poorly and did not do what the customer thought. Suggest we all REALLY check . sadly too often our Comprehensive becomes a poor 3rd party. The Old Adage , is BUYER BEWARE...
 
salmon9077 said:
The BROADER issue is that policies were sold poorly and did not do what the customer thought. Suggest we all REALLY check . sadly too often our Comprehensive becomes a poor 3rd party. The Old Adage , is BUYER BEWARE...
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Yeah, everyone should review their policies periodically.

In reviewing my life insurance policy taken out almost 5 years ago, I can increase the term by 10 years, the sum insured by €1,000 and the premiums will reduce by €7.24 per year.

Obviously life insurance is easy to compare because it's simple - you die, they should pay.

Critical Illness is a different story because some older policies have looser definitions and will, therefore, pay out on a less severe form of cancer (for example). For this reason, they're more difficult to compare.
 
Spear said:
As a side matter of interest, what's the reference for that?
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Here's a comparison between the UK and Ireland. There was a higher expectancy in the UK for quite a while - which closed in over the past number of decades.

http://www.google.co.uk/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_le00_in&idim=country:GBR&dl=en&hl=en&q=life%20expectancy%20uk#!ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=region&idim=country:GBR:IRL&ifdim=region&hl=en_US&dl=en&ind=false
 
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