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Whether you’re a parent, a single parent, or planning to start a family, understanding life insurance can make a world of difference.
Although it might be uncomfortable to discuss your own death, considering life insurance is crucial. According to a survey, death and dying remain taboo topics, with a quarter (25%) of parents admitting they aren’t comfortable discussing their deaths with their spouse and family.
Additionally, less than a third (29%) of Irish parents have considered their own funeral arrangements.
Despite these discomforts, addressing life insurance can provide peace of mind and financial security for your loved ones, ensuring they are protected and supported in the event of your passing.
In this blog, we’ll cover everything from the basics to the benefits, and by the end, you’ll see why securing life insurance is one of the best gifts you can give your family.
Why is Life Insurance Important for Families?
Did you know Ireland’s average cost of raising a child to adulthood is over €100,000? Imagine if something happened to you—how would your spouse manage this huge financial burden alone?
Life insurance can provide crucial financial security for your family in the event of your premature death. It ensures that your family receives a payout to help cover living expenses, debts like mortgages and loans, and other financial needs such as education and hobbies.
Additionally, life insurance can be combined with other cover options that protect your family if you cannot work, maintaining your ability to support them financially, such as Serious Illness Cover, Health Insurance and Income Protection. This comprehensive protection helps safeguard your family’s future and stability.
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What Types of Families Need Life Insurance?
Young Families
Raising a family is expensive, with surveys indicating that bringing a child to adulthood can cost over €100,000. In addition to covering mortgage and bill payments, you also face other extra expenses for children’s activities.
Therefore, you’ll likely need enough money to handle the mortgage plus extra funds to manage ongoing costs while your children are young.
Life Insurance ensures financial stability and peace of mind during crucial developmental years.
Single Parent
Being a single parent comes with its own set of challenges, making life insurance essential.
If you’re no longer around, who will support your children?
Life insurance provides peace of mind by ensuring they will be financially taken care of in your absence. It guarantees that your children will have the necessary resources for their education, daily expenses, and future needs, allowing you to rest easy knowing they are protected and secure.
Homeowner
Homeowners especially need life insurance to ensure their property and family are protected.
With Irish mortgage rates on the rise, reaching an average of 4.31% in March 2024, it is crucial to consider how your partner or beneficiaries would manage mortgage repayments if you were no longer around.
A life insurance policy can cover the mortgage repayments, providing financial stability and preventing the loss of your home during difficult times.
New Couple/Parents
For new couples or parents in Ireland, life insurance is a crucial consideration to ensure financial security.
As you begin this new chapter, you likely share financial responsibilities such as mortgage payments, bills, and childcare costs. If something were to happen to one of you, life insurance guarantees that the surviving partner can maintain financial stability and continue providing for your family.
Raising a child in Ireland is expensive, with costs reaching significant amounts by the time they reach adulthood. Education in Ireland is supposed to be free, but each year back-to-school costs are rising for families.
According to the Zurich Cost of Education Survey 2023, the cost of putting just one child through school can easily run into tens of thousands of euros.
The average cost of raising a child’s education, including other costs, such as clothes, after school activities, books and lunches from primary school to college, is estimated to be €100,000.
This significant expense highlights the importance of including Life Insurance in your financial planning to ensure your children receive a quality education without undue financial strain.
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What Could Life Insurance For Families Cover?
Life insurance can cover various financial needs, ensuring your family is protected and supported in various ways. Here’s a look at what life insurance can cover:
Daily Living Expenses: From groceries to utility bills, life insurance can help your family maintain their standard of living.
Mortgage Payments: It can ensure your family can continue living in their home without the stress of mortgage payments.
Education Costs: Covering school fees, college tuition, and other educational expenses to secure your children’s future.
Debt Repayment: Paying off personal loans, credit card debts, and other liabilities to relieve your family from financial strain.
Funeral and Burial Costs: Covering the costs associated with funeral services can be quite expensive.
Medical Bills: Helping with any outstanding medical expenses incurred before your passing.
Childcare Expenses: Providing for daycare, nannies, or after-school programs if your spouse needs additional support.
Income Replacement: Ensuring your family’s income stream continues, helping them manage their finances smoothly.
Savings for Future Needs: Building a financial cushion for unforeseen expenses or future goals like weddings, mortgage deposit or starting a business.
Inheritance: Leaving a financial legacy for your loved ones to secure their long-term financial stability.
By covering these critical areas, life insurance can provide a solid financial foundation for your family’s future.
Real-Life Example
For instance, Monica, a mother of two, unexpectedly passes away.
Imagine the day-to-day expenses that add up: school fees, books, and uniforms; swimming classes and other extracurricular activities; constantly buying new clothes because the kids seem to grow overnight; groceries to keep everyone fed and happy; paying for heating to keep your home warm during the chilly months; managing loan repayments; and, of course, saving for those family holidays that create lasting memories.
Imagine how Colin, Monica’s husband, would handle all these costs alone.
Monica’s death would undoubtedly have a profound emotional impact on Colin and their children, leaving them devastated. However, life insurance can at least help financially, providing a sense of security amidst the emotional turmoil.
It ensures that the family can maintain their standard of living, covering everyday expenses and future needs, allowing them to focus on healing and supporting each other through such a difficult time.
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Life Insurance Myths vs. Reality
Several myths about life insurance can deter people from getting the cover they need.
One common belief is that life insurance is too expensive. However, this is not always the case; for example, premiums can be as low as €13.72 per month.
To help you determine whether life insurance suits your needs, we’ve debunked five typical myths and misconceptions surrounding it.
Understanding the realities can clarify the benefits and affordability of life insurance, encouraging more informed decisions about securing your family’s financial protection.
When Should I Take Out a Life Insurance Policy?
Life insurance isn’t a one-size-fits-all product. Different life stages call for different considerations:
You Just Tied the Knot
Getting married is a beautiful milestone and a perfect time to consider life insurance. As you start this new chapter together, life insurance can provide a financial safety net for your spouse. It ensures that if something were to happen to you, your partner wouldn’t be left struggling with expenses like the mortgage, household bills, and any future plans you both have.
Taking out a life insurance policy early in your marriage means you’re protecting each other’s financial future right from the start, allowing you to build a life together with peace of mind.
When Having a Child
Welcoming a new member to your family is a big responsibility. Life insurance can ensure your child’s future is secure, covering childcare, education, and daily expenses.
Getting a Mortgage
A mortgage is a long-term financial commitment. Life insurance can help pay off the mortgage if you’re no longer around, ensuring your family keeps their home.
As You Get Older
As people age, their responsibilities and health risks increase. Knowing your family won’t face financial hardships, life insurance can provide peace of mind.
When Your Kids Have Kids
Over 50s Life Insurance or Whole of Life Insurance can help cover not just your kids but also your grandkids, ensuring generational security.
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Which Type Of Life Insurance Is Best For Families?
When it comes to securing your family’s financial future through life insurance, you have several options to consider. You can opt for a standalone life insurance policy that provides a payout in the event of your or your partner’s death.
Alternatively, you might combine different types of insurance to ensure comprehensive cover. For instance, Serious Illness Cover can be added to your policy to protect against specified critical illnesses, while Income Protection Insurance can provide financial support if you’re unable to work due to injury or illness.
Term Life Insurance
Term life insurance provides a lump sum payment to you and your family in the event of death. This type of life insurance applies to a specific fixed term; the policy will cease after the term has ended and no claim is made.
Whole of Life Insurance
Whole of Life Insurance will insure you for your entire life, continuing up until the event of your death. In most cases, this type of life insurance will cost considerably more than other products as there is a guaranteed payout.
Convertible Life Insurance
Convertible Term insurance is similar to Term insurance but has a different advantage.
The policyholder can convert the existing cover into a new, longer-term policy without requiring the insured person to provide further medical information at the time of conversion.
Read more about Convertible Life Insurance.
You can also change the policy to a “Whole of Life” policy, which guarantees you life insurance for the rest of your life.
Mortgage Protection
If you pass away before paying off your mortgage in full, Mortgage Protection insurance will cover the remaining balance.
Read more in our post about the most frequently asked questions about mortgage protection and the myths surrounding it.
Life Insurance – Types of Cover For Families
Single
Getting a quote by yourself and taking out a single policy.
Joint
This policy covers you and your partner and will pay out once. This policy can either be set up on a Joint Life First Death basis, i.e., the policy will pay out on the death of the first life assured, and cease.
Or on a Joint Life Second Death basis, i.e., there will be no payment on the death of the first life assured, however, the policy will pay out on the death of the second life assured and then the policy will cease.
Dual
Dual cover will pay out on the death of both the first and second lives assured. On the death of the first life assured, the benefits will be paid to the remaining life assured.
The benefits will be paid to their estate upon the death of the second life assured. Once the policy has paid out on both the first and second lives assured, it will cease.
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Is It Possible To Adjust Our Life Insurance Cover Over Time?
Many life insurance policies offer flexibility, also known as Guaranteed Insurability. Policies with a guaranteed insurability option allow you to increase your cover when significant life events occur, such as the birth/adoption of a child or the purchase of a home, without providing additional medical evidence.
Additionally, you can add Indexation to your life insurance policy, which ensures your cover increases over time to compensate for inflation.
This feature helps maintain the value of your policy, providing adequate protection for your loved ones as the cost of living rises. By adjusting your cover to keep pace with inflation, you can ensure that your beneficiaries receive sufficient financial support when needed without the risk of your policy’s value diminishing over time.
By reading our article, you can learn more about how inflation can impact your life insurance payout.
How Much Cover Does Your Family Need and How Much Is Life Insurance?
When planning for life insurance, a valuable resource is the life insurance calculator. This tool provides an estimated amount of life cover you might need, acting as a guideline to assist in your preliminary calculations.
Additionally, you can request a quote directly through our service, which compares the best life insurance providers in Ireland all in one place. This convenience allows you to shop around without the need to visit multiple websites—we do all the work for you.
Are you wondering why purchasing life insurance through a broker might be your best choice? Brokers can offer personalised advice and access to a broader range of products than you might find on your own, with better prices!
To understand the advantages in more detail, read our article on why buying life insurance from a broker could be more beneficial for you.
What Happens If I Outlive My Term Life Insurance?
If you outlive your term life insurance policy, the cover simply ends. However, some policies offer options to extend the cover term without providing any additional medical exam.
Learn more by reading our article.
Can I Get Life Insurance for My Children?
You can’t usually buy life insurance for children under 18, but some providers offer policyholders life insurance for their children for free as part of their policies. If Serious Illness Cover is included in your policy, your children will be covered, too.
Payments can be up to €7,000 in the event of the insured child’s death. Claims can be made up to 18 years old or 25 if they are in full-time education.
Your children up to age 25 are covered for up to €25,000 or half your serious illness benefit amount, whichever is lower, for as long as you are covered.
The availability and terms of this benefit can vary significantly among different insurance providers.
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Is There Any Life Insurance Benefit I Can Enjoy While I’m Alive?
Life insurance isn’t just about providing financial security after you’re gone; it also offers benefits you can use while you’re alive.
For instance, Hospital Cash Benefit provides a daily cash payout for each day you spend in the hospital. This benefit helps cover out-of-pocket expenses, including meals, transportation, and parking fees, which might not be covered by your private health insurance.
These additional funds can ease the financial burden during hospital stays, ensuring you can focus on recovery without worrying about unexpected costs.
Read our article to learn more about the various living benefits of life insurance and how they can support you and your family in times of need.
Are There Special Benefits For Families?
Yes, life insurance providers in Ireland do offer special benefits for families. Many insurers provide Children’s Life Cover and Serious Illness Cover for children as benefits when you hold Life Insurance and Serious Illness policies, respectively.
Aviva Care
When you choose Aviva for your Life Insurance, Serious Illness Cover, Mortgage Protection, or Income Protection, you can access an exclusive health and well-being service called Aviva Care.
This service is included free of charge with all new protection policies, offering a suite of valuable benefits designed to support your overall health and well-being.
Aviva Care provides policyholders with four great benefits at no additional cost: Digital GP, Best Doctors Second Medical Opinion, Family Care Mental Health Support, and Bereavement Support.
Helping Hand
Royal London goes beyond the typical insurance offering by providing access to a service called Helping Hand, which grants you access to dedicated medical professionals from the day your policy starts—not only when you make a claim.
This unique feature includes all nurses available to give you a second opinion on your diagnosis and future treatment options without additional cost. Helping Hand isn’t just for policyholders; your spouse and children can also use the service.
Should you ever experience a serious illness, injury, or bereavement, Helping Hand offers crucial support that extends beyond financial aid. To aid in recovery or coping, Royal London, through Helping Hand, may provide access to specialist therapies such as bereavement counsellors, speech and language therapists, face-to-face second medical opinions, complementary therapies, and physiotherapy for specific serious health conditions.
Are life insurance payouts taxable?
All life insurance payouts are tax-free to your policy’s named beneficiary.
Although the life insurance payout is tax-free, the beneficiary might still be liable for inheritance tax based on their relationship to you, the amount they receive, and the Irish tax laws applicable at the time of the payout.
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Can I include Serious Illness Cover In My Life Insurance Policy?
Yes, you can add Serious Illness Cover to your Life Insurance or Mortgage Protection policy, which pays out a lump sum if you are diagnosed with a specified serious illness.
If you are adding Serious Illness Cover to your Mortgage Protection or Life Insurance when the payment is made the life cover amount is reduced accordingly. It is also called an accelerated serious illness cover.
Alternatively, you can buy Serious Illness Cover as a separate policy. It’s called Standalone Serious Illness Cover and it means it is taken out as a separate policy and it is completely independent of any life protection you might purchase or already have. It is also sometimes called additional cover, separate cover, or double cover.
To understand better, read our detailed article about Serious Illness Cover where we explain everything in depth.
Other Important Insurances For Families
Serious Illness Cover: This policy offers protection by providing a lump sum if you are diagnosed with a specified serious illness. Learn more by exploring our Serious Illness Cover Guide.
Income Protection Insurance: Provides a regular income if you cannot work due to illness or injury. Learn more by reading our Income Protection Guide.
Health Insurance: This insurance provides cover for medical expenses, reducing the financial burden of healthcare costs for you and your children. Learn why health insurance is a must-have in Ireland.
Pension Plans
Contributions to a Pension: Besides providing for retirement, pensions can sometimes offer a death-in-service benefit, which provides a payout to dependents if you die while employed.
Read our Retirement Guide to learn everything about pensions and retirement planning.
Get a Life Insurance Quote For Families
Speak with one of our financial advisors, who can guide you, help you understand your options, and ensure you get the best possible policy for your situation.
Whether you’re looking for term life insurance, whole-of-life cover, a single, joint, or dual policy, or a specific plan tailored to your circumstances, LowQuotes provides the tools and information you need to make an informed decision.
We also provide a wide variety of financial services, such as mortgages, serious illness cover, pensions, financial planning, health insurance, and savings & investments.
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
