Life insurance

Life insurance, which pays money to your loved ones and dependents if you die, can be expensive. But there are ways you can get suitable protection without going out on a limb.

1. Choose Fixed Term Rather Than Whole-of-life

There are two main types of life insurance. The first - and simplest - type is called term life assurance. A term life policy gives your dependants a lump sum if you die during the term of the policy.

The second type is whole of life insurance, which pays out a lump sum if you die at any stage during your life, or for as long as you keep paying into your policy.

Term life insurance is much cheaper than whole of life insurance. If you get term insurance, you should make sure it lasts for as long as you need it, such as for when you expect your youngest to be leaving full time education.

You can also include an option to continue the cover so that you don’t have to do a new medical.  This option is called a conversion option or continuation option.

2. Consider Pension Term Assurance

A cheaper way to get life insurance is to take out a product called pension term assurance (PTA)

PTA is different to conventional life insurance policies because it is provided under a pension structure.

This means that it qualifies for tax relief in the same way as pension fund contributions.

So for a person paying income tax at 41pc, every €100 put towards a plan costs just €59 after tax relief.

What’s more, you don’t even have to have a pension plan in place to avail of this product - you just have to be eligible to have a pension plan.

However, there are a couple of catches. You need to either be self-employed or work in a company that doesn’t have an occupational pension scheme.

You also cannot have joint cover for you and your spouse; you will have to start two separate policies.

However, if you take out a PTA and cease to be eligible because you change your employment and enter an occupational pension scheme, then you don't have to cancel your life cover. You can simply change it to a conventional life insurance policy but without the tax relief.

3. Consider Buying Online

If you have done your research and know exactly what kind of life insurance product you want, you could consider buying from an online broker.

Many online brokers will offer you substantial discounts off your first year’s premium.

But if you are not sure what you need, an online broker might not be so suitable. This is because they sell insurance on an ‘execution-only’ basis, which means that you receive no guidance or advice as to whether the product is suitable or appropriate to your needs.

4 Switch Your Insurer

The Financial Regulator's Itsyourmoney.ie website publishes regular surveys of life insurance costs that show how you could make some savings over the term of a policy by switching providers, particularly if you are a smoker.

However, it’s not as simple as switching your policy from one company to another. You will have to start a new policy, and the cost can rise the older you get. Sometimes switching will involve a new medical.

5 Quit Smoking

According to the Irish Brokers Association, men who smoke will typically pay 100pc more for their life cover while women smokers will pay an additional 50pc or more.

Even if you have given up smoking within the last few years, you will need to check with providers if you are eligible for non-smoker rates.

6 Check With Your Employer

Before you go out and buy a life insurance policy, you should first check out whether or not your employer would pay out anything if you die.

Many companies with pension schemes have generous ‘death in service’ benefits for permanent employees which will pay out four times their gross salary on death.

It can be much less than that in some cases, however, and it can also depend on your seniority in the company.

You should check out what it's worth, and ensure you are not paying out too much separately on extra life cover.