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Let’s face it, none of us like discussing our own death.
In fact, most people tend to avoid the subject of death altogether.
While we all hope and often believe that nothing unfortunate will happen to us, the truth is that unexpected illnesses and premature deaths occur every day, impacting families worldwide.
That’s why it’s crucial to have a solid plan in place to protect yourself and your loved ones.
Life Insurance will pay a lump sum to your family should you pass during the term of your policy.
In Ireland, Life Insurance is sometimes surrounded by inaccurate beliefs that discourage people from considering it as a viable option.
However, we want to debunk five common myths and misconceptions about Life Insurance, enabling you to make an informed decision about whether it’s the right choice for you and your family.
Myth #1 - Life Insurance is too expensive
Putting Life Insurance in place could be one of the most important decisions you make.
It’s also extremely cost-effective. For a relatively small monthly premium, you can safeguard your family’s financial future and provide peace of mind.
Although there are many variables that affect the price of life insurance, it is generally true that the younger you are, the lower the premium is.
Life Insurance – Cost Example
- Term: 20 years
- Cover Amount: 300,000
- Age of applicant: 30
- Non-smoker
Provider | Monthly Premium |
Royal London | €16.20 |
Aviva | €17.96 |
Zurich | €18.06 |
New Ireland | €19.49 |
Irish Life | €20.58 |
If you’re unsure of how much Life Insurance you may need, you can use our Free Life Insurance Calculator.
Myth #2 - Insurance companies don’t pay out
Sometimes Life Insurance mistakenly gets bundled in with other types of insurance policies.
However, it’s different from say your car or house insurance. The notion that life insurance rarely pays out is a misconception.
In reality, insurance providers primarily deny claims due to non-disclosure of relevant information.
In fact, both Royal London and Aviva both paid out over 95% of Life Insurance claims according to their most recent reports.
When applying for life insurance, it’s crucial to provide truthful answers regarding your health and lifestyle.
While being less than forthcoming might result in a lower premium, it could potentially void your policy entirely if you ever need to make a claim.
Myth #3 -I don’t need Life Insurance, I can save money instead
While savings and investments are important, they may not be sufficient to meet your family’s financial needs in the event of your untimely passing.
Life Insurance provides an extra layer of financial security, ensuring your loved ones are protected and can maintain their lifestyle.
It’ll also likely take you significantly longer than you may think to save a large sum of money.
As per our example above, €300,000 cover costs around €16 per month.
However, if you were to try and save €300,000 over the next 20 years you would need to save €15,000 per year.
That’s €1,250 per month which is unlikely to be an option for most people.
Myth #4 I have a Life Insurance policy through work
In some cases, your employer may offer a Life Insurance policy as a benefit.
This is called ‘death-in-service’ which pays out a lump sum to your family in the event of your death while still employed.
The lump sum is often 4 x salary. However, it’s important to consider whether this amount would adequately meet your family’s needs in the long term.
Myth #5 I have Mortgage Protection so I don’t need Life Insurance
There are some key differences between Life Insurance and Mortgage Protection.
Sometimes they appear together which adds to the confusion
Life Insurance pays out a lump sum to your beneficiaries.
Mortgage Protection pays out a lump sum that will clear your mortgage.
While mortgage protection offers a valuable safeguard for your home, it is important to note that it solely covers your outstanding mortgage balance.
Life insurance, on the other hand, provides broader financial protection for your loved ones. It ensures that they can maintain their quality of life, cover living expenses, pay off debts beyond the mortgage, and secure their future in the event of your untimely passing.
It’s important not to ignore Life Insurance just because you’ve Mortgage Protection in place.
They serve two different purposes.
What should you do next?
Hopefully, we’ve now debunked some of the common myths and misconceptions around Life Insurance.
The financial services industry tends to use jargon. They also enjoy using acronyms.
It can make things difficult to understand so articles like this are useful and can provide clarity.
Remember, Life Insurance is not just about protecting yourself.
It’s about safeguarding the well-being and financial stability of your loved ones.
If you’re still unsure about whether Life Insurance is the right choice for you, don’t hesitate to reach out.
Contact us for a personalised consultation, where we can assess your specific circumstances and guide you towards the most suitable option.
| [email protected] | |
| Phone | 01 584 4280 |
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