Convertible Life Insurance Ireland is an additional option to consider when purchasing either term life insurance or whole of life insurance.
Convertible life insurance is a form of life insurance, a personal insurance which pays out a lump sum on your death, which allows you a degree of flexibility if chosen at the outset of the policy.
In the Irish life insurance market, convertible life insurance is usually purchased as an additional option when purchasing either term life insurance or whole of life insurance.
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What is convertible life insurance?
A conversion option, sometimes also called guaranteed cover again or guaranteed insurability, means that you can either change your life insurance cover, extend your life insurance cover, or convert your term life insurance into whole of life insurance without having to provide new medical evidence to your insurer.
Term Life Insurance and Whole of Life Insurance
Term insurance is life insurance which pays out a lump sum should you die during the term of the policy whereas a whole of life insurance is a form of life insurance which is guaranteed to pay a lump sum following your death, without the time limit of a term life insurance policy.
You will pay more from the outset for convertible life cover, however, this must be balanced against the increased premiums you may face if you need to change your life insurance cover later in life when you may also have developed some health issues.
Flexible or Multi Claim Policies
Some insurers offer more flexible life insurance options which would also come under the umbrella of convertible life insurance policies.
Multi claim policies or flexible protection type policies, effectively combine life insurance cover and serious illness cover and may pay out a lump sum or regular income if you are diagnosed with a specific illness, or become disabled, as well as paying out a lump sum should you die during the term of the policy.
These policies may offer a conversion option to convert the term life cover element to a whole of life policy or to extend the life cover without providing further medical evidence.
Who offers convertible life cover in Ireland?
The following providers should be considered when looking for convertible life insurance in Ireland:
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When does convertible life insurance pay out?
Convertible life insurance usually pays out a lump sum on the event of your death, provided this is within the term of the life insurance policy. In certain cases, diagnosis of a terminal illness may mean that you will receive the lump sum that would have been payable on your death from your insurer.
Whole of life insurance is guaranteed to pay out on your death, provided you continue to pay premiums.
Whole of life insurance may have an investment element which can be cashed out provided a certain time period has elapsed from the outset of the policy but this is not a feature of all whole of life policies.
Multi claim policies may pay a lump sum on the diagnosis of specific illness and/ or a lump sum if you die during the term of the policy, depending on your circumstances.
Who should have convertible life cover?
Convertible life cover is best for anyone who wants:
Benefits of Convertible Life Cover
Usually at the outset of your life insurance policy, you will be asked to provide details of your health (ie. ongoing health issues or previous health issues) and you may or may not be required to attend a medical.
The policy premium will depend on many factors but your health and age when taking out the policy will affect how much you pay for life insurance and you will, generally, pay a fixed premium based on your age and health at the outset for the duration or term of the policy.
If you choose a conversion option at this time, you will have a higher degree of flexibility should your circumstances change eg. marrying, having or adopting children, or increasing your mortgage.
You will not be required to provide further medical information on changing the policy and will remain paying a premium based on your initial age and health, although your premium will increase if you increase your level of cover.
This is useful as, generally, life insurance becomes more expensive as we get older or develop health issues and without the option of conversion, you may find yourself faced with a much higher premium for life insurance if you need to change your life insurance cover later in life.
It is also possible, with some insurers, to change the amount of your life insurance cover, to extend the term of your life insurance or to convert your term life insurance policy to a whole of life insurance policy with a guaranteed payout when you die.
How much is convertible life cover?
A quote for convertible life cover may cost more than a quote without the option of changing the policy at a later date.
However, the lower initial cost must be weighed against the increased cost of life insurance when you are older and/ or have health issues should you need to take out another life insurance policy further down the line.
These are examples of term life insurance cover with and without a conversion option, as you can see adding the flexibility of a conversion option is similar to the price of a takeaway coffee in many cases !
| Insurer | Example 1* | Example 2* | Example 3* | |
|---|---|---|---|---|
| New Ireland | Conversion €36.86 No conversion €32.22 |
Conversion €34.56 No conversion €32.85 |
Conversion €129.54 No conversion €123.06 |
|
| Zurich | Conversion €36.80 No conversion €34.53 |
Conversion €36.41 No conversion €34.17 |
Conversion €140.02 No conversion €131.00 |
|
| Royal London | Conversion €37.03 No conversion €35.25 |
Conversion €36.65 No conversion €34.84 |
Conversion €141.68 No conversion €134.60 |
|
| Aviva | Conversion €42.32 No conversion €40.28 |
Conversion €41.89 No conversion €39.82 |
Conversion €161.92 No conversion €153.83 |
|
| Irish Life | Conversion €51.01 No conversion €46.97 |
Conversion €50.69 No conversion €46.68 |
Conversion €191.18 No conversion €174.40 |
* Example 1 – Age 34, non smoker, €500,000 of cover over 30 years
* Example 2 – Age 47, non smoker, €200,000 of cover over 20 years
* Example 3 – Age 55, non smoker, €350,000 of cover over 20 years
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Convertible Life Insurance Calculator
The price you pay for convertible life insurance depends on a number of factors such as level of cover, term of policy, age, whether you are a smoker, your lifestyle and the type of convertible option you choose.
Amount of Cover
The amount of cover you require may be affected by levels of debt or a mortgage, the number of children you have and their ages or by how much you may wish to leave a relative.
Term of the Policy
The term of your convertible life insurance policy is how long you need the policy to cover your life for or whole of life cover, if this is what you choose.
Age
Generally, The younger you are on taking out a convertible life insurance policy, the less you will pay.
Smoking Status
If you smoke or vape, you will pay more for life insurance. It is wise to be honest about your smoking or vaping as your insurer may not pay out if you are not.
Health Status
If you have pre- existing or chronic health conditions, as well as any previous health issues you may pay more for single life insurance cover or you may face exclusions in cover.
Lifestyle
If you have what is classed as a dangerous job or hobbies this may increase your premium or you may face exclusions from cover.
Conversion Options
Different life insurers offer different options when choosing convertible life insurance policies and it is very important to be aware of what you are paying for.
Term life insurance policies may offer the option to increase the amount of cover or increase the term of the policy. Some policies may offer the option to convert a term life insurance policy to a whole of life insurance policy.
Multi-Claim and Flexible Protection Policies
Multi claim or flexible protection policies may offer a combination of life term life insurance, whole of life insurance, and specified illness cover and it is essential that you check the details of what is covered and to what degree you can change your cover should you require it later on.
You may also choose to link your policy to inflation ie. indexation.
Guaranteed or Reviewable Quotes
A guaranteed premium will be fixed for the life of the policy, a reviewable premium may mean that your insurer will review your premium during it’s term. It is essential that you check carefully when receiving a quote whether that quote is guaranteed or reviewable.
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