Life Insurance

Life Insurance

A guide to choosing the right life insurance policy to suit your needs.

  • By Paddy Compare
  • 03 January 2022
  • Updated 23 June 2023

Life Insurance is a form of financial security for your loved ones in the event of your death. Most insurance policies now come with specific terms, conditions, exclusions, and limitations, making it essential to read and understand the details before choosing a policy.

Staying informed about the various factors affecting your insurance policy allows you to comprehend the coverage scope, premium payments, policy duration, renewal options, and any additional benefits available. This knowledge helps you choose a policy that suits your requirements.

Paddy Compare helps you compare life insurance plans from insurance brokers in Ireland and choose a policy best suited to your needs.

This guide provides answers to some of the most commonly asked questions related to life insurance.

In this article

What is life insurance?

Life insurance is a contract between you and your insurance broker. In return for regular premium payments, your insurer promises to pay out a lump sum called 'death benefit' to your beneficiaries in case you die.

Who needs life insurance?

Whether or not you need life insurance depends on your financial situation and the requirements of your loved ones. Here's how you can find out whether or not you need life insurance:

Need life insurance Do not need life insurance
Parents with children relying on your income. Do not have anyone dependent on your income.
Sole earners in a household with dependants. Receive death-in-service benefits through your employment or pension plan.
Self-employed people with a business which runs on funds provided by you. Have sufficient income, savings or investments that could provide income.
People with a mortgage who want to arrange funds for repayment in case they die. Partner earns enough money to cover themselves and any dependents.
Retired and want to set aside funds to cover funeral expenses or inheritance tax.

In addition to this, it's important to carefully analyse your life and the changes that can happen over the course of time to better decide whether or not you need life insurance.

What are the types of life insurance policies?

The types of life insurance policies available in Ireland:

  • Term life insurance - It financially protects the policyholder's beneficiaries in the event of their death. The coverage is for a specific period or term, typically ranging from 5 to 30 years.
  • Whole life insurance - It provides coverage for the entire lifetime of the insured person, as long as the premiums are paid.
  • Mortgage protection life insurance - It ensures that the outstanding mortgage balance is paid off if the policyholder passes away during the term of the policy.
  • Death in service cover - It is provided by an employer as part of an employee benefits package. It offers financial protection to employees' families in the event of death while they are employed with the company.
  • Joint life insurance - It covers two individuals, typically a couple or business partners, under a single policy and provides a payout upon the death of one of the insured individuals.
  • Terminal illness cover - It provides a payout if the insured person is diagnosed with a terminal illness.
  • Over 50s life insurance - Designed for individuals aged 50 and above, it is typically available without the need for a medical examination, guaranteeing acceptance regardless of the individual's health status.
  • Critical illness cover - It provides financial protection if the insured person is diagnosed with a specified critical illness listed in the policy. It helps cover the costs associated with medical treatment, lifestyle adjustments, or other financial obligations.

What coverage amount do I need?

The coverage amount you should opt for depends on your current financial situation and your loved one's requirements. Your coverage should be enough to:

  • Maintain your family's standard of living
  • Cover your mortgage or any other loans
  • Cover living expenses, school, or college fees

The term for which you will require coverage also depends on the purpose for which you are taking out life insurance. People typically buy cover for the following periods:

  • Until their dependents become financially independent
  • Until they can pay back mortgages or loans
  • For their entire lives

To make an informed decision regarding the coverage amount of your life insurance policy, it is crucial to delve into what a life insurance policy covers in general.

What affects the cost of life insurance?

Factors affecting the cost of life insurance:

  • Age - The risk of death increases with age. The older you are, the more you'll be charged.
  • Gender - Since life expectancy is shorter for men, they are charged more.
  • Smoker - Smoking increases your risk of death, so premiums are much higher for smokers.
  • Health - Pre-existing medical conditions or a history of family illnesses lead to higher premiums.
  • Occupation - If the nature of your work is risky (eg. mining, firefighting), you may be charged more.
  • Lifestyle - If you lead an unhealthy lifestyle (eg. excessive drinking) or engage in risky hobbies like skydiving, you may be charged higher premiums.
  • Your coverage needs - The amount of coverage you need as well as the duration you need it for.
  • Add-ons you may opt for - Optional covers added to your policy plan.

As you learn about the factors that influence your life insurance policy, it’s worthwhile to check out some tips on how to get a cheaper life insurance policy in Ireland.

What are the prerequisites to know about?

  • If you miss a payment or stop paying your monthly premiums your policy will lapse. There may be some provisions for restarting your plan.
  • You can cancel your life insurance policy by writing to your insurer.
  • To apply, you will need to provide details of your occupation, your health, existing medical conditions, name and contact details of your doctor, your lifestyle, your smoking status and drinking habits.
  • In most cases, the life insurer will accept your application and your life cover will be activated at normal policy rates.
  • Most insurers will not require a medical test unless you want to take out a lot of coverage, are of old age, or have a history of poor health.
  • Although most payouts are tax-free lump sums, your beneficiaries may be liable to pay inheritance tax.
  • Income tax relief is generally not available for life insurance premiums.
  • If you are self-employed or do not have a pension scheme, you will be able to take out a special life insurance policy that lets your premiums qualify for income tax relief.

Getting the right life insurance policy

There are several factors to consider before picking the right policy for you. It is important to shop around to ensure you can get the best life insurance that will cover your needs.

Best practices when getting life insurance

Things to do:

  • Check if you have any death-in-service benefits through your employment.
  • Read this article to familiarise yourself with the various types of policies available to you.
  • Calculate the amount of life insurance you need and over what term it will be needed.
  • Complete your application form truthfully.
  • Keep your premiums up-to-date.
  • Review your coverage regularly, particularly if your circumstances change.
  • Compare life insurance at Paddy Compare.

Things NOT to do:

  • Do not change your policy unless you need to, as premiums could be higher once you are older.
  • Do not just settle for the policy offered by your bank, let Paddy Compare put you in contact with a broker that can help.

Real-life examples

Laura and Bryan Sarah and Mark
Aged 28, no children, non-smokers Aged 48, two kids, non-smokers
Mortgage protection Term life insurance and income protection
Having recently gotten married, Laura and Bryan have decided that the time is right to purchase their first home in Dublin. Laura works in social services and Bryan is a trainee accountant. As home buyers, Laura and Bryan will need mortgage protection to ensure that they can continue to pay their mortgage, even in the event of a death. Sarah and Mark from Cork have two children. Sarah is a self-employed beautician and Mark is a taxi driver. As both are self-employed they needed to get covered, should one of them die, to protect and provide an income for their family. Sarah and Mark started a term life insurance policy with income protection to ensure they'd have a lump sum if either of them should die or become ill and become unable to work.

How do I get life insurance?

Paddy Compare's expert insurance advisors carefully assess your needs and puts you in touch with the most suitable insurance brokers for you. Follow these 3 simple steps and start exploring trusted, local insurance brokers with Paddy Compare:

Step 1: Quote - enter your details using Paddy Compare's online life insurance quote form by clicking here

Step 2: Choose - our specialist life insurance brokers will contact you with advice and tailored quotes to suit

Step 3: Apply - complete your application form and pick the quote that suits you and your family.

Why Paddy Compare?

With a range of different life insurance policy plans available and many factors to consider while buying a policy plan, anyone can feel overwhelmed!

Paddy Compare can help. Our expert life insurance advisors carefully assess your requirements and put you in touch with the most suitable life insurance brokers for you. We will help you get the best price quotes in Ireland from trusted brokers.


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