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Do I need Life Assurance? Ask AM Financial

A quick refresher

In exchange for a regular, usually monthly, payment from you, life assurance pays out a lump sum on your death. The policy can be in force for the whole of your life (“whole of life assurance”). Alternatively, it can be in force for a temporary period (“temporary assurance”). An example of the latter is a mortgage protection policy, which we deal with in a separate blog.

How much do I need to pay?

The main determinants of the amount of your regular monthly payment (“the premium”) :

1. The amount of the lump sum payable.

2. The term of the policy. (Obviously whole of life is more expensive then temporary assurance.)

3. Your age

4. Whether you smoke or not.

5. Your health.

Other factors may also come into play. Skydivers and office workers are not treated the same!

Give me some numbers!

At the time of writing, one of the major insurers on the Irish market was quoting the following levels:

Monthly Premiums for protection of €100,000

30-year term assurance for a 30 year old : €15.15

30-year term assurance for a 30 year old smoker : € 16.14

Whole of Life Assurance for a 30 year old : € 69.19

Whole of Life Assurance for a 30 year old smoker : € 83.60

Some points to note:

1. The figures above are for €100,000 life assurance. If you are looking for €400,000 assurance, you can multiply the monthly premiums by 4.

2. Smokers pay more.

3. Getting life assurance for term (e.g. 30 years) is a lot cheaper than whole of life assurance. For whole of assurance, the insurance company knows for certain they will be making an outgoing payment.

4. Mortgage protection will be cheaper than term assurance. This is because the sum insured falls in line with the mortgage balance. We deal with mortgage protection in another blog.

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