Life Assurance or Life Insurance, is an insurance against the likelihood of your death.
To distinguish the terms, assurance is protecting against something that will happen, and insurance is protecting against something that might happen. The difference for life cover is either term life insurance, for a set period in which you might die, or whole of life cover, where your getting assurance that a benefit will be paid when you die.
These days, term insurance is the most common of these. This is because it’s cost effective and the risk to insurers is lower. It can be set up in several ways to protect you, your family, or a lender with whom you are borrowing money from for a mortgage or otherwise.
These types of insurance pay out a free lump sum to the beneficiary if you die within the term of the policy.
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What is life cover/life insurance?
Life Insurance is a lump sum of money that is paid out on the death of a life insured. It can be for a set term or it can be on a whole of life basis. The lump sum death benefits are tax free.
What is benefit & premium indexation?
Indexation is a feature used to protect your benefits against inflation over time. Your benefit and associated premium will increase each year at set rates which you will know from the outset. The idea here is that €1,000 in today’s terms won’t be €1,000 in 30 years’ time. Indexation can only be obtained at the start of your insurance and can’t be added on later.
What is escalation?
Escalation is a feature whereby holder of income protection who are in a period of claim, i.e. they are in receipt of a weekly or monthly benefit, will have their benefit escalate whilst in payment to alleviate the effects of inflation over time. E.g. If you expected a 3% increase in salary year on year, you can elect to have your income protection benefit escalate in a similar fashion. This will impact the initial premium of the contract.
What is a conversion option?
HA conversion option is a feature which allows you to convert your Life Insurance Policy into a new policy of equal benefit and term, without having to provide fresh medical details. Having a conversion option attached to a policy is very benefit and cost effective. You can convert your policy multiple times at any stage during the term of the policy. When you convert, it doesn’t matter what has happened to you in the interim medically, you will subject to ordinary rates at the time of converting.
What is dual life cover?
Dual life is like having two separate individual covers built into one contract, i.e. there are dual benefits. This is ideal for married couples where one spouse will benefit immediately in the event of a claim on the other spouse, but then the family of the surviving spouse will still have cover in place.
What is joint life cover?
Differing from Dual life, joint life is where two people share one benefit. This means that when two people are involved on one policy, there will only be one payout in the event of either the first, or the second death.
What is Occupation Class?
For holders of income protection, occupation class is a determination from an income protection provider as to how likely you are to be unable to work based on your occupation and the work that you do. For example, an electrician would have duties that would be considered riskier, climbing ladder and working with wiring, than an office worker. An applicant will be graded from 1 to 4 based on their occupation, with 1 being the lowest risk, and 4 being the highest. This will have a material impact on the premium. In cases where the insurer considers the occupation too risky, e.g. a deep-sea diver or bomb disposal expert, they will not offer cover.
What is a reviewable premium?
A reviewable premium is exactly what it says on the tin. After a certain amount of time of the policy being in place the Life Insurance Company will review the premium to assess whether they can maintain your premium for the benefit you have in place, or the feel they need to increase it based on your age, or drop the amount of cover you have. Generally these types of policies are cheaper in their early years, but can get quite expensive over time.
What is a guaranteed premium?
A guaranteed premium is a premium is one that is guaranteed to remain unchanged during the term of the cover. You can have a guaranteed premium that indexes in line with the indexation rate. Otherwise you will know from the outset what premium you will be paying for the entire term of the cover.
What is Over 50’s Life Insurance?
Over 50’s Life Cover is a cost-effective style of insurance that is designed specifically to provide applicants over the age of 50 with a moderate level of life cover to insure against the cost incurred by funeral expenses. There is no medical underwriting for this type of insurance and premiums are based solely on the age of the applicant and the level of cover that they want. You cannot claim on an over 50’s policy within the first two years of the policy but if you die you will receive a refund of your premiums.
What is Term Life Insurance?
Term insurance is a phrase used to highlight the fact that the insurance is in place for a set term, this could be 10, 15, 20 years or more. Sometimes it can be called ‘Level Term Insurance’ as the benefit will remain level throughout the time, i.e. will not decrease.
What is Whole of Life cover?
Whole of life is life cover that is in place for life unless it is cancelled by the policyholder or they do not keep up with premiums. The cover is guaranteed to remain in place for the whole of their life as long as they keep up payments.
Why do I need Life Insurance?
Life Insurance is an important cover that provides next of kin with financial security in the event of a death. It can also be used to insure debt, so that in the event of a death, it will be paid without being imposed on the deceased’s estate. You can also protect a business against the loss of a key staff member. It is worth considering in many aspects of day to day life.