How to Get the Right Life Insurance for You

Life insurance is one of the most important decisions you'll make to secure your family’s financial future. Whether you’re a young professional just starting out or someone approaching retirement, choosing the right life insurance policy is key to ensuring peace of mind for you and your loved ones.

In this blog, we will guide you through the different types of life insurance available in Ireland, explain how premiums are calculated based on age, and provide specific recommendations for each life stage. By the end of this guide, you’ll have the knowledge to make informed decisions that best suit your situation.

What is Life Insurance?

Life insurance is a contract between you and an insurance provider that guarantees a lump sum payment (called the death benefit) to your beneficiaries in the event of your death. This money can be used to cover debts, pay for funeral expenses, or replace lost income, providing crucial financial support for your family when they need it most.

Main Types of Life Insurance in Ireland

‍There are several life insurance options available in Ireland, each designed to fit different needs:

• Term Life Insurance: This type of policy provides coverage for a specified term, typically ranging from 10 to 30 years. It is often the most affordable option, offering financial protection during the period when your family may need it most.
• Whole Life Insurance: Provides lifelong coverage as long as premiums are paid. This type of policy may accumulate a cash value over time, which can be accessed during your lifetime or left to beneficiaries.
• Mortgage Protection Insurance: Specifically designed to cover your mortgage, ensuring that if you pass away, your home will be paid off, and your family can remain in it. Also called ‘decreasing term’ assurance, it can also be used to provide extra cover when children are younger and the family more vulnerable. 
• Serious Illness Cover: Offers a lump sum payout if you are diagnosed with a specified serious illness. This type of insurance is particularly important for covering medical expenses and lifestyle adjustments during recovery.
• Income Protection Insurance: Provides financial security by replacing part of your income if you are unable to work due to illness or injury.

Life Insurance Payments and Premiums Based on Age

How Life Insurance Premiums are Calculated‍

Life insurance premiums are primarily determined by your age, health, and the amount of coverage you need. The younger and healthier you are when you take out a policy, the lower your premiums will be. This is because younger individuals are seen as less of a risk by insurers.

Let’s look at how premiums might change for a healthy, non-smoker seeking €300,000 worth of coverage until the age of 65:

• At Age 30: €27 per month
  Taking out life insurance at 30 guarantees a lower premium for the next 35 years as the individual is considered low risk by insurers.
• At Age 35: €31 per month
  Premiums increase slightly, but remain affordable. Insurers still consider you to be in relatively good health with minimal risk.
• At Age 40: €40 per month
  The increase in risk, due to age-related health concerns, pushes premiums up.
• At Age 50: €70 per month
  By this age, health risks are higher, you only have 15 years before you reach the age of 65 and insurers reflect this with a significant premium increase.

Why It Pays to Start Early

As shown above, locking in your life insurance early ensures that your premiums remain lower throughout the policy's term. Starting in your 20s or 30s can result in substantial long-term savings, and it guarantees financial protection for your family during your peak earning years.

Life Insurance for Young Professionals (20s-30s)

In your 20s or 30s, you may not have dependents, but you could have financial obligations like student loans or a new mortgage. You’re focused on affordability but also planning for future life events.

Recommended Types of Life Insurance:

Term Life Insurance: An affordable option that provides coverage when you need it most. It’s a good choice if you want financial protection for your partner during this period of lower risk.

• Mortgage Protection Insurance: For new homeowners, this ensures your mortgage is paid off if anything happens to you.
• Serious Illness Cover: Offers peace of mind if you’re diagnosed with a critical illness, helping to cover medical costs.

Life Insurance for Growing Families (30s-40s)

At this stage, many people are raising children, paying off a mortgage, and planning for their family’s future. Life insurance becomes essential to protect loved ones from financial hardship in case of an untimely death.

Recommended Types of Life Insurance:

• Whole Life Insurance: Provides lifelong protection, offering both death benefits and an investment component.
• Term Life Insurance: Offers financial security for your family until your children are financially independent.
• Income Protection Insurance: Protects your family’s income if illness or injury prevents you from working.
• Mortgage Protection Insurance: Ensures that your family can stay in their home without financial stress.

Life Insurance for Pre-Retirement (50s-60s)

As you move into your 50s and 60s, life insurance remains a critical component of financial security, especially for those looking to cover any remaining financial obligations and ensure their loved ones are supported after they pass. For individuals over 50, specific types of policies cater to the unique needs of this age group.

Recommended Types of Life Insurance:

Over 50s Life Insurance: This type of policy is designed specifically for people aged 50 and above. One of the standout benefits of Over 50s Life Insurance is that most policies offer guaranteed acceptance, meaning you won’t need to undergo any medical exams. This makes it particularly appealing for those who might have existing health conditions or for those who prefer the simplicity of not needing health screenings.

Over 50s Life Insurance usually provides smaller coverage amounts, typically aimed at covering funeral expenses, outstanding debts, or leaving behind a small inheritance for loved ones. While the premiums may be higher than they would be for younger individuals, this insurance is an ideal option for ensuring that your family doesn’t face financial burdens after your passing.

For more detailed information on Over 50s Life Insurance, visit our comprehensive guide here.

Whole Life Insurance for Funeral Costs: Whole life insurance guarantees a payout, regardless of when you pass away. This ensures your beneficiaries will have the funds to cover funeral expenses and any remaining debts.

Serious Illness Cover: Health risks rise with age, so securing serious illness cover can help you manage medical expenses.

Estate and Inheritance Planning for Retirees (60s and beyond)

In your 60s and beyond, life insurance may take a backseat to estate and inheritance planning, which becomes a priority for protecting your assets and ensuring your family's financial security. A key part of this process is creating a comprehensive Will, which dictates how your assets—such as property, savings, and investments—will be distributed after your passing. Without a Will, Irish intestacy laws take over, which may not align with your wishes.

For those with complex estates or specific concerns, trusts offer a useful tool for managing and distributing assets over time, particularly for young or vulnerable beneficiaries. Inheritance tax (Capital Acquisitions Tax) is another major consideration, as it can significantly reduce the value passed to heirs. Gifting assets during your lifetime, as well as making use of tax reliefs and exemptions, can help mitigate this tax burden. Additionally, establishing joint ownership of assets like property can make the inheritance process smoother for surviving spouses or partners.

Key Considerations When Choosing Life Insurance

When selecting life insurance, it’s important to assess your specific financial needs carefully. Start by determining how much coverage is required to cover outstanding debts, such as mortgages or loans, funeral costs, and any ongoing living expenses for your dependents. Ensuring that your family maintains their current lifestyle in the event of your passing should be a key priority. Additionally, factoring in inflation is crucial. A policy that seems sufficient today may lose value over time, so it’s important to consider how inflation could affect the purchasing power of the payout in the future.

Working with a financial advisor is highly recommended, as they can help tailor a life insurance policy that meets your unique situation. A professional can guide you through the complexities of different policies, help you assess your risk factors, and provide insight into how much coverage will offer long-term security for your family. Consulting with an expert ensures that you’re making informed decisions and selecting the best possible protection for your loved ones.

Final Thoughts

Life insurance is a crucial part of your long-term financial planning. Choosing the right policy depends on your individual circumstances and life stage. Whether you’re a young professional, a parent with growing responsibilities, or a retiree planning for the future, life insurance offers protection for your family and peace of mind for you.

For more personalised advice and to explore your options, contact FitzGerald Flynn Insurances Ltd today. Our team is ready to help you find the best life insurance policy for your needs, no matter what stage of life you’re in.