A Comprehensive Guide to Life Insurance Cover in Ireland

by | Mar 24, 2023 | Financial Tips

There are many types of insurance available, and if you are just starting to get organised and are considering different types of policy, you may be finding it to be an intimidating minefield! Which types of insurance do you really need, and how do they all work? If you decide you do need cover, which type of policy should you opt for? Life insurance can feel like a difficult subject – no-one likes to think about what happens in the event of their death. But in many ways, life insurance is one of the most vital types of cover. If you have financial dependents, it’s an essential way to make sure they will be looked after should anything happen to you.

At Oaktree Financial we can help you find the best possible policy for you and your family, ensuring they will be well cared for and giving you peace of mind. Here is our comprehensive guide to life insurance cover in Ireland today.

What is life insurance?
Life insurance is a type of policy where you pay a monthly or annual premium in order to be insured in the event of your death. This means that, should you die, your family or dependents will receive a pay out that will compensate them for the loss of your financial contribution to the family. For many, this will be arranged as a lump sum intended to pay off the outstanding balance of your mortgage, so they do not lose the family home, although of course the money can be used however the beneficiaries see fit. A life insurance plan can be arranged over a fixed term, for instance 20 or 40 years, or up until a certain age (perhaps retirement age, when you would expect to lose your regular income anyway), or as lifetime cover. A financial adviser will be able to help you assess what would work best for your family.
How life insurance works
A life insurance policy will be personalised to the policy holder. The insurance company will want to assess the likelihood of your death, and the less likely this seems, the cheaper your policy will be. In order to come up with a fair statistical estimate of your longevity, insurance underwriters will ask a series of questions, covering lifestyle and health-affecting habits, such as whether you smoke, drink, exercise etc. They will also need to know other determining factors such as your job, your age, and existing information on your overall health. Pre-existing health conditions will also have an effect on the policy you will be offered.

From the insurance company’s perspective, they want you to live a long time, so that they don’t have to pay out on your policy, and they keep receiving your premium. Anything that effects your health negatively will also have an effect on your policy, pushing up the price as it increases the risk of the insurance company having to pay out.

Some insurers are so keen to improve your health that they now offer schemes and incentives to encourage fitness in their customers – from health tracking apps to rewards such as cinema tickets for those who attend the gym! And the real prize, of course, is the lower cost of your premium.
Sometimes the underwriters will feel they need more information before making a decision about your application. This could take the form of a further questionnaire (for mild health issues); a nurse medical / screening (often used for weight issues, blood pressure, and cholesterol readings); a medical report from your GP (for moderate health issues); or a full medical exam (needed to properly assess severe health issues).

Exclusions and exceptions
Sometimes getting a life insurance policy can be more complicated. Many life insurance applications will be straightforward and you will simply be accepted at a standard price. But if the underwriters are concerned that your health or lifestyle presents too great a risk, you may find that the insurance company will only accept you on special terms, or postpone you, or decline you.

Special terms can mean you will receive a loading – ie you will have to pay more. It can also mean you will receive an exclusion, meaning you won’t be able to claim on the policy for certain conditions. Often special terms can mean both a loading and exclusions.
Loadings and exclusions are the result of risk appearing to be too high in certain areas – for instance, if your mother developed breast cancer before a certain age, your risk too is higher, and so the insurance company may say you will not be able to claim for breast cancer.
A postponement essentially means they would like you to try and make some changes, and then try again later. This could mean losing some weight, or waiting to see if your new medication works.

If you are declined, it’s usually for medical reasons. The insurer sees you as too high a risk. This can be particularly frustrating because if you have existing health conditions you are more likely to feel you need life insurance. However, life insurance underwriting is not an exact science and you may well be accepted by another insurance company. If you’re in this tricky situation, it’s particular useful to have a financial adviser who will know which insurers may be more sympathetic to your specific situation.

Why is life insurance important
Life insurance is an essential asset for anyone with dependents or financial responsibilities. If you have a spouse or children, you will want to make sure that they are cared for should anything happen to you. It’s unpleasant to contemplate your own demise, but reassuring to think that your family wouldn’t lose their home or be unable to attend college or fulfil other life chances in the event of your death. A good life insurance policy is an essential part of a well-organised financial life. If your partner would be unable to pay the mortgage without your income, or your children would no longer be able to maintain their standard of living, then you need a life insurance policy. It will give you peace of mind that you have fulfilled your financial responsibilities and looked after those you care about properly.
What will life insurance cover?
Life insurance is generally viewed as a way to replace the deceased’s income (income protection), pay off outstanding debts (for instance, a mortgage on the family home), or cover funeral costs. However, there are many ways of tailoring your policy, and policies will have different special features, as well as the lump sum pay out which is usually at the heart of the plan. These special features can include:

-Specific mortgage protection insurance, intended to cover the remaining balance of the mortgage if you die or are diagnosed with a serious illness and become unable to work. The illnesses that are covered will likely be specified in the plan. Getting mortgage protection insurance is often a compulsory part of taking out a mortgage.

-Serious illness cover, which is sometimes a standalone policy in its own right, but can also be tagged on to a life insurance policy as an extra benefit.
Accidental death cover, which is specifically for if your death happens by accident rather than by old age or serious illness.

-Income protection, that will pay you a regular income (up to 75% of your annual salary) if you can’t work due to injury or illness.
Terminal illness benefit, which will pay out before your death if you are diagnosed with a life limiting condition and not expected to survive more than a year.

-Specified illness cover, also sometimes known as critical illness cover or serious illness cover – which pays out a lump sum if you are diagnosed with an illness specified in your plan.

-Business protection, which protects against the loss of a valuable member of your business like an employee, director or partner.

Is life insurance taxable?
This is a complex field, and you should receive advice specific to you on this topic from your financial adviser. The tax status of your life insurance depends on several factors, including the relationship between you and the beneficiaries. If you are married, this helps shield the money from tax penalties, while children of the deceased probably won’t pay any tax (assuming they receive less than €335,000.) Brothers, sisters, nieces and nephews can receive up to €32,500 tax-free but pay 33% on anything over that amount. Other beneficiaries can only receive €16,250 tax-free before paying the 33% tax.
How Oaktree Financial can help

The world of life insurance can feel intimidating. With so many options to choose from, and with it being a very personal kind of policy, it’s natural to need some help finding the best life insurance plan for you. Our team of friendly experts at Oaktree Financial know exactly how to get you the policy you need at the very best rate. If you are concerned about looking after your family when you are gone, call Oaktree Financial today.


Oaktree Financial Services Ltd is regulated by the Central Bank of Ireland.

All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified financial adviser before entering any financial contract. Oaktree Financial Services Ltd will not be held responsible for any actions taken as a result of reading these blog posts.

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