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‘What’s another Year – Very Important in fact!’ 

Content

• Introduction
• Example 1
• Example 2
• Premium costs Graph – for every 5 years increase in age.
• Summary
• Jameson Financial Agencies

Introduction

At Jameson Financial we pride ourselves at getting the best deal for our customers but we also realise how hard it is for families to meet their financial commitments. We meet clients daily who recognise the importance of having Life Insurance, Serious Illness cover or Income Protection cover but unfortunately sometimes their budget does not allow them to put the right level of cover in place.

A key factor taken into consideration by insurance company underwriters is age. Sounds obvious, and it is – but very often people put off implementing their insurance cover, and for every birthday that passes their insurance costs increase. While the price increases for every year that passes it also has a significant impact on continuing their insurance cover when they are older.

Below is an example of how age can affect the cost of your insurance, and how much you can benefit by taking insurance out as soon as you can. While the example is based on two males, premium costs for females with matching circumstances are the same.

Example 1

Mark (35 years old) versus Peter (40 years old)

Mark is a 35 year-old, non-smoker, with no health issues and wants to get Life Insurance cover of €200,000 for a term of 20 years.

The cost of Mark’s insurance is €17.26 per month as quoted by Aviva Life & Pensions.

Mark’s friend Peter has decided to also get €200,000 Life Insurance cover over a term of 20 years and like Mark he is a non-smoker, with no health issues but he is 40 years of age. Peter’s premium is €23.42 per month also quoted by Aviva Life & Pensions.

The difference in monthly premium is €6.16. This may seem insignificant but that equates to €73.92 over a year. Or, to put this another way, over the term of the policy, the cover will cost Peter nearly €1,500 more than Mark because he was five years older than Mark when he started.

Example 2.

Mark (55 years old) versus Peter (60 years old)

At the end of their respective policy terms Mark will be 55 years old while Peter will be 60 years old. If they wish to continue with their Life Insurance cover they can do so by exercising their Conversion Option.

Jameson Financial always recommends a Conversion Option which allows clients to convert into a new policy for the same amount of cover without having to answer any medical questions at the end of the term. This means that if the client is in poor health they are still guaranteed a continuation of cover beyond the original 20 year term selected.  All the quotes cited here include the cost of the Conversion Option.

So lets say Mark and Peter wish to continue with cover of €200,000 for a further 10 year term.

Mark can get his cover extended for another 10 years for only €66.89 per month but for Peter to extend his cover for 10 more years it is a whopping €109.14 per month.

That’s €42.25 per month more expensive. €507.00 annually and comes out at €5,070 more expensive over the 10 year lifetime of the policy.

In fact, Mark could extend his €200,000 cover for 20 years to give him cover until he is 75 years of age and still get it cheaper (€15 per month cheaper), than Peter’s 10 year policy which only covers him until he is 70.

Premium costs for every five years increase in age.

The following graph shows how premiums increase  with age.

As with the examples above, the graph quotes are for a male non-smoker (again quotes are the same for a female).

The above graph shows premiums do not increase in a straight-line. Increases for each five year gap are less at younger ages, they start to increase at a higher rate between 40 years and 45 years, and then they really jump from 45 years of age onwards.

Summary.

If you are thinking of taking out Life Insurance then the sooner you do so the better. The longer you leave it, the more expensive it will be. Moreover by stalling, you also run the risk of paying even higher premiums in the future should you be unlucky enough to develop a health issue.

Jameson Financial Agencies

Quotes have been provided by Aviva Life and Pensions,  however Jameson Financial also hold agencies with Royal London, New Ireland Insurance, Zurich Assurance Company, and Irish Life. We continue to provide the best advice and products, at the most competitive prices for our clients.