Has your reviewable whole of life insurance policy (or that of a relative) been reviewed recently, or is it up for review soon?
Not happy with the options you received?
Well, you’ve come to the right place!
How Does a Reviewable Whole of Life Assurance Policy Work?
Reviewable whole-of-life policies are a type of life assurance that pay out a sum of money to your family or your estate when you die.
If you’re eagle-eyed, you may have noticed I called it life assurance not insurance.
Since nobody has ever outlived a whole of life policy, a payout is assured.
Reviewable whole of life policies differ from typical life insurance policies because they include an investment element too. Using insurance jargon, we would call them index-linked policies (i.e, they are linked to the performance of a stock market index).
If you take out a reviewable whole of life plan, the insurer invests some of your premiums/money and uses the rest of it to pay for the protection/assurance portion of your policy.
The amount you pay, as well as the sum paid out in the event of your death, depends on several factors, including the performance of the investment component.
When stock markets go up – happy days, the investment component should cover the life insurance element, providing you with cost-effective coverage.”.
However, markets don’t keep going up.
So What Happens Then the Investment Part Underperforms?
If the investment element is weak, when the insurer reviews your cover, they will increase your premiums or reduce your cover.
And when they increase your premiums, it’s not by a couple of euro per month.
I have seen premiums increase by up to 600% from €50 to €300!
Unfortunately, for the poor sod who has this policy, these increases occur during a Perfect Storm.
they’re usually retired so they can’t afford the higher premiums
and they have had some health issues which means they can’t get cover elsewhere.
It’s a case of Hobson’s Choice – pay through the nose for cover you really can’t afford or cancel the policy and leave your loved ones at risk.
What to do if You’ve had a Review?
Ask yourself these questions:
Do you need the cover anymore?
Have the birds flown the nest?
If your children are no longer dependent on you financially, do you need life insurance?
Do you have savings/children that will pay for your funeral instead?
Can you get cover elsewhere?
If you’re in good health and under 74, you can apply for life insurance with another life insurance provider.
You have two options; non-reviewable whole of life assurance – the Cinderella of the whole of life assurance family, or term life insurance where you insure yourself for a certain number of years (much cheaper than whole of life cover)
Is there a cash value on your policy?
If there is, and you can get cover elsewhere, you should take the money and run.
At your next review, your investment may have “bombed out”, leaving you with nothing to cash in.
Can you convert your policy to a fixed, whole of life plan?
If you have an Irish Life policy, you will have the option to convert your reviewable plan into a fixed whole of life plan of up to €30,000.
If this option is available, Irish Life will write to you explaining how it works.
If you have changed address since you took out the policy, you should contact Irish Life immediately.
How Much Does a Fixed or Guaranteed Whole of Life Policy Cost?
Here are some quotes based on a healthy. non-smoker looking for €15,000 fixed price whole of life assurance to cover funeral expenses:
65 year old: €45 per month
70 year old: €65 per month
74-year old (maximum age allowable to apply for cover): €82 per month
Will You Have to do a Medical?
It depends on your health.
If you’re in good health and less than 71 years young, you can get up to €30,000 cover based on an application form only.
If you have “age-related” medical issues such as high cholesterol or blood pressure, again an application form should suffice.
For more serious health issues, the insurer will write to your GP for a report and make a decision based on that report.
You’ll only need to attend for a medical exam if you have a history of severe health issues or if you need a l0t of cover.
Over to you…
Has a dreaded review letter dropped through your (or your parents) letterbox?
Would you like to go through your options?
That’s what we’re here for.
Please schedule a call if you’d like some help.
Thanks for reading
lion.ie | making life insurance easier
Editor’s Note. We published this article in 2019 and have regularly updated it since.