Life Assurance - Do I need it?

Hannaho

Just wondering if I need life assurance any more? I have the family home and a house left to me by my mother, to leave to my two children, mortgage free. My children are 19 and 21 - one has two more years at college, the other has 3 more years. The house my mother left me is 10 minutes walk from their college. They both have part-time jobs now. My workplace will pay out 3 x times my salary if I die whilst working. I'm trying to cut down my expenses as I want to reduce my hours at work. The current life assurance is 57 per month.

Geuze

First get a quote to see if you can beat the 57 pm.

https://www.labrokers.ie/life-insurance/

I suppose the next question is are you happy with 3x salary to be paid out to you children if you die next week?

Hannaho

Hi! Geruze, thanks for your reply. I couldn't beat the 57 pm quote as I am in my 50s. 3 x times my salary would be 150k. I would be happy with this amount, as it would definitely get them through college. The 2 x properties are worth about 650k in total. They could keep them, or sell them if I died.

Geuze

Your details

Life 1: male, non smoker, born 01/01/1967

Life Insurance benefit: €100,000.00

Policy Term (years): 10

Quote Type: Annual

Basis of cover: Single Life

Premium = 315 pa, or 26.25 per month.

I found that in one minute.

Hannaho

Hi! Geuze, thanks for that info. My policy is actually for 300k, 57 per month, as I took it out when the children were very young, and I had a reasonably large mortgage.

xeresod

https://www.boards.ie/discussion/comment/119030795#Comment_119030795

Does it include critical illness benefit too? It seems very expensive if not

I pay 40 per month for 220k plus 50k critical illness (it's actually a joint policy coving both of us for 81pm)

dotsman

Guys, are you sure you are not all talking about life insurance? Because it is a very different thing to life assurance.

As for life insurance, you don't mention a partner. It sounds like the kids will have plenty, but what will your partner's financial position be if you were to die? Likewise, as mentioned above, do you have decent serious illness cover? How would you be financially if you had a stroke tomorrow and lived a long life, but not working anymore and maybe requiring a carer etc?

Henry Ford III

https://www.boards.ie/discussion/comment/119031650#Comment_119031650

What's the difference exactly?

Crocodile Booze

https://www.boards.ie/discussion/comment/119032227#Comment_119032227

Life insurance, you pick a term in years, say 30 years for the policy. Assurance is a lifelong policy until death.

amdublin

https://www.boards.ie/discussion/comment/119032408#Comment_119032408

I'd call that a term assurance policy. And a whole of life policy.

Insurance to me means an event that might happen (car crash). Assurance means something that will happen (death).

dotsman

Ultimately, insurance is for "if" scenarios, assurance is for "when" scenarios.

Another way to remember the difference is to look at the basic terms "insure" and "assure". "Insure" is to arrange to receive compensation should a terrible thing (that you want to avoid) happen. "Assure" is to guarantee an outcome.

Life insurance is about paying out if the insured dies before a certain age. The insured pays a small premium every month/year. If the insured reaches the specified age, that's it, it's all over, nothing is paid out.

Life assurance is about paying out when the person dies. The person invests a sum of money every month/year into a fund with an agreed target amount hoping to be reached during their life. If they die before the fund has reached the appropriate value, the insurance company pays the outstanding amount. They can also cash in the policy and get their money back (less fees/penalties/commissions etc).

Mortgage Protection is a for of life insurance, where the benefit is constantly decreasing (in line with the balance outstanding on your mortgage loan). It is the cheapest for of life insurance and is intended to just simply clear the loan in the event that you die before it is repaid.

Unfortunately, in recent years, marketing people (especially in the uk, but it seems to be spreading here) confuse the names when naming/selling products (sometimes life insurance is advertised as "term assurance" and I've even seen life assurance advertised as "whole of life insurance". But, as an old teacher used to say - if someone selling you insurance can't even tell the difference between insurance and assurance, then just walk away.

dotsman

Not sure if I'm good at explaining it. Here is a teacher explaining it to junior cert students (knowing the difference is part of the curriculum for Junior Cert Business studies).

https://youtu.be/V6YpoIJ7f_I?t=78

Henry Ford III

Junior cert level is right. Nobody uses that differentiation professionally in reality. That's why I asked.

Henry Ford III

https://www.boards.ie/discussion/comment/119026244#Comment_119026244

First thing to do is to get a proper fact find and needs assessment done. Get it done by a professional and be prepared to pay for it too.

Discount brokers are by their nature cheap but if you end up with inappropriate cover using one could be an expensive error.

They are certainly not a default choice.

dotsman

https://www.boards.ie/discussion/comment/119032636#Comment_119032636

Most professionals (by definition) do differentiate between the two. It's the cowboys you have to worry about!

A quick google does show that the majority of major players thankfully use the terms correctly.

Zurich

https://www.zurich.ie/life-insurance/faqs/difference-between-life-insurance-assurance/

Aviva

https://www.aviva.ie/insurance/life-insurance/what-is-life-insurance/

oneLife

https://www.onelife.com/our-solutions/why-life-assurances/

Forbes

https://www.forbes.com/uk/advisor/life-insurance/life-insurance-vs-life-assurance/

legalandgeneral

https://www.legalandgeneral.com/insurance/life-insurance/definitions/assurance-vs-insurance/

switcher.ie

https://switcher.ie/life-insurance/

layalife

https://sales.layalifeinsurance.ie/ui/quickquote/step1

...and that is just from a quick google.

Henry Ford III

I didn't like your tone there dotsman.

Junior cert and Google frankly aren't important. You might not know but I'm a QFA in practice and with years of experience. I know dozens of other professionals active in the area also.

Nobody uses that differentiation as I already said. That's not opinion, it's fact.

Your suggestion that it makes us "cowboys" is incorrect and insulting.

So think very carefully if you choose to post further here, because if you do I'll be looking at your posts with a very critical eye, and you'll face infraction if you insult me or anybody else.

Mrs OBumble

No, you don't need it.

skippy2

Ditto Mrs OBumble...No, you don't need it.

You're Children are old enough and will be well enough provided for should something happen to you.

Make the saving...You dont need a financial planner to do anything re this. Make that saving also. You have already seen the saving is there to be made

Hannaho

Thanks, Skippy and Mrs O'Bumble - that's what I thought. It's a lot each month. I want to reduce my direct debits, and do a little less hours at work. My partner doesn't come in to it, in the sense that he has his own house - all paid off, and our finances are separate. The children are mine from a previous relationship and so my responsibility financially. Both children have part time jobs in a local hotel. They live on the tips they get - usually around 100 per week, and save the rest. If I died tomorrow, they would easily be able to afford their fees, as their dad, pays half their fees - agreed legally. They would easily then be able to afford the bills for the house, and the house would be theirs, with no mortgage on it, and they could also rent out two of the rooms to cover bills if needed.