# Getting life companies to pay your premium....



## oysterman (5 Mar 2004)

Recently (3 months ago) took out a life policy with Hibernian, paying a premium of €1021 pa.

LA Brokers quoted me yesterday €926 for identical cover - which, amazingly, would also be with Hibernian.

But LA Brokers would give me a year one discount of €834.

Therefore, the first year of this policy would cost me net €92, a saving of €929 versus my current (identical) policy.

Obviously, I'm a mug for not having bought online in the first place....we'll take that as a given.

But I'm wondering is there anything to stop people buying a new policy every year from equivalent outlets like LA Brokers and enjoying constant first year discounts?


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## premiums (8 Mar 2004)

*sarty*

Oysterman,

It's not a bad idea, but here are some reasons why it might not be practical:

- Hassle
- As you would be taking out a new policy each year, you would have to be underwritten each time.  Potentially that could involve a new medical (and the hassle associated with that) every year.   If you have any medical history, that could get very cumbersome.     
- Each year you get a year older, and hence the premium for the new contract will go up each time. This increase gets quite steep at the older ages. Admittely if you're getting such a large discount, this may not matter to you, but it will need to figure in your calculations.  In contrast, the premium for an existing contract remains the same each year for the full term.
- Contracts change every year, so different definitions/clauses could be in the new contract which could restrict the cover you have.  This is of more importance for critical illness policies than life cover but could apply to life cover (e.g. a new AIDS-type scare).   However it means you would need to keep in touch with and research the definitions every year.  
- Life Companies could drop LaBrokers from their agency list (and hence prevent LaBrokers from selling their policies) if they found they kept lapsing existing policies and taking out new ones.
- For the above reason, LaBrokers could stop selling to you.  Frankly, I'd be surprised if they facilitated this.
- Life Companies could also stop selling to you (I suppose they'd need to find out what you're up to first - but they probably would spot it during underwriting, and the fact you have to state if you have existing policies with them).


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## oysterman (8 Mar 2004)

*Re: sarty*

Hi premiums,

Naturally the person playing this game would need to look at the premiums over the lifetime of the policy.

However, I think that this notion has merit in a life market where premiums are generally falling - we should all re-examine our policies every couple of years and look at any big year one discounts available as a further incentive.


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## Dr Moriarty (9 Mar 2004)

*Life cover...*

Evening all, hope you don't mind if I piggyback on this query..?

In early April a couple of ten-year term policies I took out back in '94 with NU (now Hibernian) on my own and the missus' life are set to expire. The bigger of these (a IR£250K policy against the (then slim) chance of meself walking under the proverbial bus) has an option to renew cover for a further three years w/o medical, etc. But the premium quoted in the form letter I got from Hibernian looks way off the scale to me, compared to the real-time "thru-Hibernian" quotes I got from Tesco.ie ("every little helps...") and especially the first-year discount offered by LAbrokers.ie and discussed above. Am I safe in assuming that the sensible thing for me to do now is to wait for my over-priced NU/Hib policies to expire in April, and then log on to Mr Geraghty's website..?

I'm afraid I don't have the correspondence to hand at the moment of writing and can't quote hard figures but, for what it might bring to bear on the query, I already have
(a) more than adequate PHI and Hospital cash plan cover
(b) a "white-collar" public sector job such that it would be hard for me to lose my salary and pension, short of meeting that proverbial bus, and
(c) modest equity built up in my home (purchased in 1994... yippee!)

In other words, all I really need (I think!) is an adequate term cover plan for the "catastrophic" scenario. I'm turning 40 in late April and I assume it would make sense for me to fill out a proposal form before that "significant" birthday arrives, but otherwise I'm fit as a (rusty old) fiddle and wouldn't have any reason to worry about taking a medical... afaik! :rupert 

Thanks for any wisdom you can offer,

Dr. M.


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## petra (9 Mar 2004)

*Term*

Dr. Moriarty you must be 61 years of age to only get a 3 year term on the policy. That would imply that you have a Convertable Term Inurance policy with option to convert without medical evidence. But then again if it was you would have to take up the option before you were 65 and be able to extend to say age 80 or 85. 

I think you have a 9 year Triple Option Plan which is Indexable, Convertable and renewable so you are not comparing like for like. Every 3 years you have an option to increase Sum Insured taking your age into consideration and w/o med evidence. At any stage you can exercise conversion option.

eg policy taken out in 1985 for €100K, in 1988 offered increase of something like 30% to €130K for rates in force. Same thing again in 1991. In 1994 you would have option to take out new 9 year policy with same options.

Which is better ? Cost of options is costed within the product. 

I'd buy a new Convertable Term policy for amount that you want and lock in now.


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## oysterman (9 Mar 2004)

*Re: Term*

Dr. M,

Why wait until the overpriced policy expires?

It is precisely this sort of inertia that fattens up life companies. If we know something is overpriced we should replace it now.

In addition, makes little sense to postpone looking for cheaper cover while there is the (albeit remote) possibility that your health could decline before applying.

Act immediately.


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