# Questions on Life assurance



## clonbolia (8 Dec 2008)

Hello,

I'm thinking of buying a term life assurance policy to protect my family in case I or my spouse dies.

> Is joint/Dual better?

> Do I usually have to take a medical test? (I have high blood pressure buts its treated well and am a bit obese)

> I might be forced to move abroad for employment reasons next year? Would this impact my policy?

> Is there any tax relief on life assurance

> In your opinion, is the payment on specificed diseases or hospital worth it?

Cheers,
Clonbolia?


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## LDFerguson (8 Dec 2008)

clonbolia said:


> > Is joint/Dual better?


 
Dual is better. On a Dual Life policy, in the event of one claim, the policy continues on the survivor. On a Joint Life policy, the policy ends after one claim. 



clonbolia said:


> > Do I usually have to take a medical test? (I have high blood pressure buts its treated well and am a bit obese)


 
Report from your own GP will probably be required. Medical a good possibility. Combination of high blood pressure and obesity may cause a loaded (higher) premium, depending on medical reports. 



clonbolia said:


> > I might be forced to move abroad for employment reasons next year? Would this impact my policy?


 
Depends on the country. If you have plans made, you should disclose this now. 



clonbolia said:


> > Is there any tax relief on life assurance


 
If you are self-employed or in non-pensionable employment you can take out a life assurance policy on yourself which attracts tax relief. If your spouse is self-employed or in non-pensionable employment, s/he can also. 

Otherwise, no.



clonbolia said:


> > In your opinion, is the payment on specificed diseases or hospital worth it?


 
These optional extras have a value. I tend to favour Income Protection over specified serious illness cover if you can get it. Do a search here for Income Protection.


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## StevieC (8 Dec 2008)

Liam has answered your queries very well. I would just add the following;

- There is generally very little difference in price between a Joint and Dual Life policy. For the little extra premium paid you get a far superior policy.

- One of the questions on the proposal form will be do you plan to move abroad other than for holidays, disclose your moving arrangements here.

- Hospital Cash is not really that great a benefit in my opinion as hospitals tend to get people out the door as quickly as possible. Unless you are seriously ill, it is unlikely you will spend more than a day or two in hospital.
Specifed illness cover is nice to have but not a must have if the policy is mortgage related. As Liam said, an income protection policy suits some people better but this is down to personal preference and often depends on whether your employer offers any sick pay benefits.


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## lillyjoe (19 Dec 2008)

Hi,
I have a question on "whole of life" assurance. I am in my mid thirties and have a policy (for 9 years) that I have paid €90/mth for with a guarenteed payout of €300k when I die. I'm told this is good cover but it isn't linked to inflation so I'm worried that in another 30 years the value of the policy will be significantly reduced. The company has quoted me a premium of €183/mth to increase cover to €450k (i.e. a doubling of premium for an increase of 50% in cover). I'm wondering if this is good value. I'm aware that "whole of life" policies are quite rare now. I am a non-smoker and in excellent health. Can anyone advise me?
Lillyjoe


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## StevieC (19 Dec 2008)

Hi Lillyjoe

Whole of life policies are still common but the problem with them is that they have premium reviews and as you get older, these reviews generally tend to end up with the premium rising significantly.

Dependent on the company you have the policy with they may allow you to add an indexation option to the policy, this would solve your concerns about the value in 30 years. Indexation increases the cover and premium each year to combat the effects of inflation. A quick call to the insurance company would tell you if they will allow you to make this change.

Alternatively you could take out a term assurance policy for say 30 to 35 years with indexation applying to the sum assured and the premium. This will guarantee that you will know what the premiums and benefit will be for the next 30 to 35 years. This may work out cheaper than your whole of life policy but the cover would end at the end of the term. However you could put a Continuation Option on this type of policy that would allow you to effect a new policy for the same sum assured over a new term at anytime during the life of the policy without the need for medical evidence to be provided. The price would be age related but at least you would have the guarantee that you could get cover again regardless of your health.

At age 45 you would qualify for Eagle Stars Guaranteed Whole of Life plan, this is a superb policy as there are no premium reviews and is worth keeping in mind for the future.

Regards

Stephen


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## lillyjoe (19 Dec 2008)

Thanks Stephen. I've looked to be allowed index the policy but missed out on an option to do so a number of years ago and now it is gone. I thought that by increasing the cover now that it would cover the value eroded by inflation over the past 9 years and the next number of years too depending on how much the cover is increased. I was interested in the whole of life option because it will always be worth something. I was wondering if the figures I quoted seem reasonable for an increase in cover considering my age. Judging by what you say, if I pass up on acting on this now and revisit this in a number of years the cost of increasing cover will be even more?


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## Jimbobp (21 Dec 2008)

I wouldn't be so sure that your whole of life policy 'will always be worth something.' Like any investment I'm sure it has taken a battering lately and I have found that life companies suck money from the investment side of these policies the older you get (to pay for life benefits). Also, as some of the other posters have mentioned these policies have regular reviews where a doubling of premium to keep existing benefits seems the norm at the moment. A viable alternative (if you can get it) is eagle star/zurichs
 guaranteed whole of life policy. Which doesn't have an investment element but far more importantly IMO will give you an indexed linked whole of life policy that will not be reviewed. You should contact a qualified financial adviser before deciding on anything.

www.powerinsurances.ie


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## StevieC (22 Dec 2008)

lillyjoe said:


> Thanks Stephen. I've looked to be allowed index the policy but missed out on an option to do so a number of years ago and now it is gone. I thought that by increasing the cover now that it would cover the value eroded by inflation over the past 9 years and the next number of years too depending on how much the cover is increased. I was interested in the whole of life option because it will always be worth something. I was wondering if the figures I quoted seem reasonable for an increase in cover considering my age. Judging by what you say, if I pass up on acting on this now and revisit this in a number of years the cost of increasing cover will be even more?


 
I agree with what Jim said in previous post, a whole of life policy will not always be worth something if your policy is reviewable, any savings element will be eaten up in future reviews as you get older. Also as most of these types of products use a managed fund as a default investment vehicle, it would have taken a bit of a hammering in the last year.

You are best to review this now and get the policy you want long term as life assurance rates are age dependent and each year you leave it, the higher the cost will be long term.

You dont qualify for the Eagle Star guaranteed whole of life policy at the moment as entry age is 45 but a long term life assurance product with an indexation option and/or a conversion option sounds like it would suit your needs and you could review your situation again at age 45 in relation to a whole of life policy. If you want to save, you are better off putting the money you save by buying a cheaper life assurance product in the credit union in my opinion or one of the banks special interest deposit accounts. Whole of Life policies should never be used as a savings policy as you have no guarantees long term.

Kind regards

Stephen


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## lillyjoe (31 Dec 2008)

Thanks Stephen and Jimbobp.
I assumed the whole of life policy would always be worth something because there will always be a pay-out someday provided the premium is paid monthly (i.e. I'm going to die sometime). I understood that I could have this option for my family in the event of my demise but alternatively that in, say 25 years (when I'm nearly 60) and have paid in my €90/mth that I could sell the policy to a company who may be willing to take it on considering my age (60) and the €300k the policy would be worth when I die (for e.g. by 60 I would have paid approx 33k in premiums, a company might be willing to buy the policy for 180k with the view that I may only live a further 10-15 years when they will pocket 300k). Maybe I am wrong in all this. 
Quote:
"Also, as some of the other posters have mentioned these policies have regular reviews where a doubling of premium to keep existing benefits seems the norm at the moment."
Under the policy I have there is no review. If I do nothing I continue to pay a €90 premium with a value of €300k. If I increase the premium to increase the cover, this is a once off increase - there are no further reviews.
I take Stephen's point that it's not going to get any cheaper. I am not aware of any other insurers in the market who will offer a similar policy to a person my age.
Thanks again for all your help and advice. It is much appreciated.
LillyJoe


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## StevieC (5 Jan 2009)

lillyjoe said:


> Thanks Stephen and Jimbobp.
> I assumed the whole of life policy would always be worth something because there will always be a pay-out someday provided the premium is paid monthly (i.e. I'm going to die sometime). I understood that I could have this option for my family in the event of my demise but alternatively that in, say 25 years (when I'm nearly 60) and have paid in my €90/mth that I could sell the policy to a company who may be willing to take it on considering my age (60) and the €300k the policy would be worth when I die (for e.g. by 60 I would have paid approx 33k in premiums, a company might be willing to buy the policy for 180k with the view that I may only live a further 10-15 years when they will pocket 300k). Maybe I am wrong in all this.
> Quote:
> "Also, as some of the other posters have mentioned these policies have regular reviews where a doubling of premium to keep existing benefits seems the norm at the moment."
> ...


 

Without knowing what type of product you have, I cant say for certain but when you mention that you pay €90 a month for €300,000, my understanding of that is that the €300,000 is a payment in the event of death only, it is not a payment/part payment when you cease the policy. I have never heard of a company buying back a policy but thats not to say it couldnt happen. 

My advice is ring your insurer and ask for the current value (not the benefit) of the policy. This will give you a good indication if there is a savings element. Also ask them if this value is guaranteed or will reduce as you get older to pay for the life assurance. While making the call you could also find out if they will "buy" back the policy at a future date. It will give you a better indication to decide how to proceed.

Regards

Stephen


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## Instyle (24 Feb 2009)

Hi Guys,

I have a 30yr MPP - Decreasing Mortgage Protection – Joint Life First Death 550k now at 533k after 2yrs. Its costing me € 90pm. I would prefer not to have a decreasing policy so I asked my broker for an alternative option as I think there are better priced options. They advised a Pension Term Assurance policy til 65yrs giving me 500k costing € 63.00 pm. I am a non smoker 36yr old.

Is this a better option? 
I presume I will need to make sure it is index linked also?

Many Thanks


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## Jimbobp (24 Feb 2009)

Was the original MP policy assigned to a lender as part of a mortgage? If so then the pension term policy won't be suitable to replace this as you cannot assign the policy to a lender. It also can't be set up on a joint basis (i.e it will be on your life only). Based on the info above it sounds like the pension term policy may be a viable option in addition to the existing policy but not as an alternative.



www.powerinsurances.ie


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## Instyle (24 Feb 2009)

Hi 

Yes IIB at the time. My broker never mentioned that I could discontinue the ORIGINAL MP policy. I presumed therefore that this was possible. As the pension term policy has a tax relief option it was working out very reasonable at € 38.00 approx for me and € 28.00 for my wife so seemed like a better option as the 500k was guaranteed and possibly index linked


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