What is life insurance?

Image Daragh Cassidy
Head Writer

Life insurance is one of the most common forms of insurance in Ireland. So what exactly is it and why do you need it?

Life insurance or life cover pays out a tax-free lump sum if you die during the term of the policy. It’s possible to have single life cover, where only one person is insured, or joint life cover or dual life cover, where two people are insured under the one policy. 

Life insurance can give you peace of mind that your loved ones will be kept financially secure if the worst should happen.

Give me an example

Let’s say you took out a life insurance policy of €300,000 over 30 years. 

If you died at any time during the 30-year term of the policy, a tax-free lump sum of €300,000 would be paid out to your estate.

If, however, at the end of the term you’re still alive, nothing will be paid out and you’ll receive no refund of the premiums you’ve paid. 

It’s also important to know that money will only be paid out in the event of your death. If you get seriously ill nothing will be paid (though there are other forms of insurance for this such as specified illness cover).  

Do I need life insurance?

Not everyone needs life insurance and whether you need it will depend on your personal circumstances. 

You may need cover if you have a family or others who rely on you for financial support or if you have no other life insurance benefits through your job or pension plan. If you have a young family, you will need more life cover than if your children are older, because the benefit will have to last longer.

On the other hand, you may not need any cover at all if you have no dependants or anyone who relies on your income. Similarly if you already have life insurance cover through your pension plan or through work then there’s usually no need for additional cover. 

Before taking out life insurance it’s always a good idea to speak with a qualified financial advisor who will conduct a full financial review with you.

Additional benefits

Sometimes you can add benefits to your life insurance policy such as indexation or ‘inflation protection’. In this case, your level of cover (but also your premium) will rise by a fixed amount, usually 5% each year, to help keep up with inflation.    

So using the same example as above, if you died in year one of your policy, €300,00 would be paid out. But if you died in year 10, almost €500,000 would be paid out by your insurance company as your cover has been increasing by 5% every year. 

This type of cover is sometimes called increasing term insurance as the level of cover is increasing each year.   

Specified illness cover is another benefit that can be added to your life insurance policy. See our other guide on specified illness cover for more information on what this is.  

Another common benefit that can be added is a conversion option. This allows you to extend the term of your cover at any point over the course of your policy without having to take a medical examination or answer any questions about your health, regardless of your age or health status. Convertible premiums are usually more expensive than non-convertible premiums.  

Terminal illness benefit 

Usually you have to die before a payment will be made. 

However some policies will have what's called a terminal illness benefit.

In this instance, if you're diagnosed with a terminal illness and have fewer than 12 months to live, your life insurance company will pay out the full amount of life cover as of the date of diagnosis.

A terminal illness is an illness where, in the opinion of your consultant and your insurer's chief medical officer, you won't survive the next 12 months.

Many, but not all, life insurance policies come with this benefit as standard nowadays. 

I already have mortgage protection, do I still need life insurance?

Generally, mortgage protection is designed to pay off your mortgage if you die, not to provide a cash sum to your dependants. So you’ll usually need separate life insurance to provide a cash lump sum if you have a family.

Another way of looking at it is that mortgage protection protects the bank and ensures the mortgage they’ve lent you will be repaid even if you die. Life insurance protects you and your family and ensures your dependants will be financially secure if you die. 

Who sells life insurance in Ireland?

There are lots of providers who sell life insurance in Ireland such as Aviva, Irish Life, New Ireland, Royal London, and Zurich to name a few. 

Do I need to undergo a medical examination to take out life insurance?

It depends. If you’re in fairly good health then the answer is usually no.

However if you have a history of illness, are over a certain age, or are applying for a large amount of cover then you may need to undergo a medical examination or complete an over-the-phone medical questionnaire, which will be organised and paid for by the life insurance company.

Your life insurance company may also have a medical questionnaire sent to your doctor for him or her to complete.

How much is life insurance?

The cost of your policy will depend on several things such as the amount of cover you need, how long you want the policy to run for, your age, your health status, and whether you want single life cover or joint/dual life cover. 

If you’re a smoker you’ll also pay far more for your cover than a non smoker would. 

How do I apply?

You can apply for life insurance through We deal with all of the main life insurance providers in Ireland meaning we can find you the best quotes available for the cover you need.  

To start your application click here.