Term life insurance:

Life insurance policies pay a lump sum to your named beneficiary or your estate if you die during the term of the policy. Term life insurance is the most straightforward and one of the most affordable forms of life insurance. For example: you might take out a term life insurance policy on your own life for €100,000 over 10 years. If you die within 10 years (the term), the policy pays out €100,000 to your dependants. If you don’t die within the term of the policy, no benefit is paid out and the policy ends.

Conversion:

If you add a conversion option to a term assurance policy you can renew or extend the term of your policy at a future time for a cost appropriate to your age and the terms offered by the company at the time, regardless of your state of health at that time. This protects you in case your health deteriorates and you can’t get cover in the future.

Indexation:

This allows you to guard against inflation eroding the real value of your cover over time. Premiums and cover increase annually at your policy anniversary date. Pay attention to the rate of increase in premium versus the rate of increase in cover. Some policies have a cheaper premium to begin with but have a higher rate of increase in premium over time.

How much does life insurance cover cost? 

Your monthly life insurance premiums will depend on a number of factors:

• How old you are when you take out the cover

• How long you want the cover

• The level of cover you want, and whether you want this cover to increase annually, say at 3% per year.

• Your general health

• Whether you smoke or not (smokers will be charged more than non-smokers for the same cover)

• What additional benefits and options you want to add on.

Remember: Extra benefits may be added to a basic term policy for an extra cost. Some of these benefits could include: serious illness cover, where you could make a claim if you were diagnosed with one of the serious illnesses covered; index-linking, where your cover increases in line with inflation each year; and a conversion option, which allows you to convert your policy into a new policy before the end of the term without having to prove your good health.