Life insurance in Ireland is a vital protection for your family in the event of your passing. It is a tax-free lump sum which can maintain their lifestyle, unburden them of debts, and cover daily living costs. For spouses/civil partners, the payout is income-tax-free and no CAT (inheritance tax) arises; for all other beneficiaries (e.g., children, nieces/nephews, unrelated persons), CAT may apply depending on thresholds—this is often planned for using a Section 72 policy.
Although the lump sum is income tax free, a Capital Acquisitions Tax (CAT) could apply if the insurance payout causes a significant change in your beneficiaries’ circumstances. This is an issue that many people solve with the use of a Section 72 policy.
Roger Carragher, a Central Bank-regulated Qualified Financial Advisor, can help to guide you towards the best policy for you and your family, giving personalised, clear advice to secure your financial future.
Quick Summary
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Lump-sum payout: Income-tax-free lump sum paid to your beneficiaries.
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Inheritance Tax (CAT):No CAT between spouses/civil partners; CAT may arise for other beneficiaries depending on thresholds (often covered via a Section 72 policy).
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Eligibility & Ages: The minimum age at which the funds can be accessed. This age is 18 (Term policies typically from age 18–91)
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Coverage Types: Term Life (temporary), Whole of Life (permanent)
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Typical Uses: Clearing debts, replacing income, funding education, funeral costs
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Cost Factors: Age, health status, smoker/non-smoker, cover amount, policy length
Speak with a Qualified Financial Adviser
Get personalised advice on Life Insurance. No obligation.
- QFA with 22+ years’ experience
- Central Bank of Ireland regulated
- No-obligation review
Why Do You Need Life Insurance?
A secure financial plan should not just involve growing your current wealth. It should also involve a safety net for your loved ones in the event of your passing. A suitable life insurance policy is a cornerstone of a secure financial plan as it protects them from the burden of financial issues in your absence.
Clear Outstanding Debts
The most significant benefit of a life insurance policy is enabling your loved ones to eliminate the burden of debt from their lives. This could be in the form of a mortgage, a car loan, credit card debt, or miscellaneous debts. With the average outstanding mortgage balance in Ireland being around €214,000, according to the Central Bank of Ireland, this ensures much-needed peace of mind.
A good life insurance policy can clear these debts and allow your loved ones to hold on to key assets such as the family home. It is essential to structure the policy effectively, however, to avoid the potential financial stress of facing inheritance tax.
Replace Lost Income for Your Family
The loss of your income could have a significant impact on your family’s financial situation. A payout from life insurance can rectify this by potentially replacing several years of your annual salary. This gives your loved ones the breathing space to manage daily living costs and unforeseen expenses while adjusting to the difficult circumstances. Unless your policy is regularly reviewed, however, this replacement income may not reflect any future growth in your salary.
Fund Your Children’s Future Education
The average cost of a full third-level education in Ireland can often exceed €40,000. A comprehensive policy provides a dedicated fund to cover all associated costs to guarantee your child’s future education. It is important to note that if these costs rise significantly, the initial lump sum may not fully cover all expenses.
Cover Final Expenses & Funeral Costs
Relieve the additional strain of funeral costs on your family at an already difficult time. A life insurance policy will provide instantly accessible funds to ensure funeral expenses are paid, as well as any outstanding medical bills.
How Does a Life Assurance Payout Work?
In the event of your passing, your loved ones receive a life insurance payout in the form of a single, tax-free lump sum. That is, it is free of income tax. Typically, the funds can be accessed within weeks of submitting necessary documentation such as a death certificate and policy details.
If the lump-sum means that benificiaries exceed their personal threshold, inheritance tax (Capital Acquisitions Tax) can apply. A special type of cover is therefore usually applied called a Section 72 policy, to cover this potential inheritance tax bill.
Life Insurance Policy Types
There are two main types of life insurance policies in Ireland, term life and whole life policies.
Your ideal policy depends on the needs of your family, and clearly understanding each one is imperative to making the correct decision.
Term Life Insurance
Term life coverage provides affordable options for a set period, typically ranging anywhere from 10-50 years. This coverage is generally taken out by a younger generation and can help provide peace of mind in covering temporary costs associated with mortgages and child-rearing years. Your cover ends as soon as the set period is up, which is why it is usually a more affordable option.
It is, however, a riskier option. If you later convert or take out a whole-of-life policy, premiums will reflect your age and health at that time. It’s worth discussing options (e.g., conversion features) so today’s plan still works for tomorrow.
Whole of Life Insurance
A whole life insurance policy, as the term suggests, covers you for your whole life. It is a guaranteed payout for your family as long as premium payments are maintained. It is an important tool in estate planning and managing the previously-mentioned inheritance tax obligations. This policy ensures that the full value of your inheritance is passed on to your loved ones. The value in this policy is that it provides the ultimate peace of mind to know that your family are secure indefinitely.
How Does Life Insurance Differ from Serious Illness Cover?
A life insurance policy and serious illness cover are two different types of cover for two different life events. Life insurance offers protection for your family when you pass away, whereas serious illness cover offers protection and financial support if you are diagnosed with a specific covered illness.
Understanding these differences can allow you to make an educated decision to meet your family’s specific needs.
Speak with a Qualified Financial Adviser
Get personalised advice on Life Insurance. No obligation.
- QFA with 22+ years’ experience
- Central Bank of Ireland regulated
- No-obligation review
How Much Life Insurance Cover Do I Need?
Determining the right amount of life insurance is crucial. While it is difficult to nail down an exact figure, we can generate an estimate that would provide your family with financial security.
Step 1: Calculate Your Debts & Outstanding Mortgage
We can start by identifying and combining all current financial obligations, including your mortgage balance, personal loans, car financing, and any credit card debt. Determining an accurate figure for these obligations ensures that your policy will fully cover all of them, protecting your loved ones from any future financial hardship.
You can start by calculating any financial debts you have. This can include:
- Mortgage
- Personal loans
- Car financing
- Credit card debt
- Etc…
The goal is to determine an exact figure that would see your family debt-free.
Example Calculation: Mortgage (€200,000) + Personal Loan (€10,000) + Car Loan (€15,000) + Credit Card Debt (€5,000) = Total Debts (€230,000)
Step 2: Estimate Your Income Replacement Needs
Next, we need to establish how much your family would typically spend annually on daily living expenses. Think of costs such as:
- Weekly food shop
- Childcare
- Utilities (Electricity, gas, etc.)
- Phone bills
- Insurance (Health, car, etc.)
Example Calculation: Annual Family Income Requirement (€50,000) x Duration (15 years) = Total Income Replacement Needs (€750,000)
Step 3: Factor in Major Future Costs
While it’s impossible to predict the future, you can certainly identify any one-off future expenses that are likely to arise for your family.
These can include:
- University education
- Home repairs & improvements
- Weddings
- Etc…
Example Calculation: Child’s University Fees (€40,000) + Weddings (€20,000) + Home Repairs (€15,000) = Total Future Costs (€75,000)
Step 4: Subtract Your Existing Savings & Assets
Next, you must identify any current assets in your possession that would be passed to your family.
This can include:
- Pension funds
- Investments
- Savings accounts
- Any existing life insurance policies
Subtracting this figure from your total insurance needs gives an accurate figure, ensuring that the policy is specifically suited to your circumstances.
Example Calculation: Total Required Cover (€1,055,000) – Savings & Assets (€100,000) = Recommended Life Insurance Cover (€955,000)
Speak with a Qualified Financial Adviser
Get personalised advice on Life Insurance. No obligation.
- QFA with 22+ years’ experience
- Central Bank of Ireland regulated
- No-obligation review
What Factors Determine the Cost of Your Premium?
Life insurance in Ireland is different for each individual. Insurers calculate the cost of your premium based on a personal risk assessment. The higher the risk is for them to insure you, the more expensive your premium will be.
Your Age and Health
Your age and health are the most significant factors in pricing life insurance. Statistically, smokers can expect to pay roughly twice as much as non-smokers, as reported by the Health Insurance Authority annual report. Similarly, older individuals with existing health conditions will face higher premiums to reflect the added risk of insurance.
Factors assessed will include:
- Medical history
- Blood pressure
- Cholesterol
- BMI
- Family history
In general, the younger and healthier you are, the less money you will pay for a premium.
Smoker vs. Non-Smoker
Smoking significantly increases the risk to your health, and thus affects your life insurance cost. This includes all forms of nicotine use, including cigarettes and vapes. Non-smokers benefit from lower premiums due to the decrease in health risks, even if all other factors such as age, weight, etc are the same.
The Level of Cover (€) and Term (Years)
The amount of cover you choose (the lump sum) and the length of the policy (the term) directly influence your premium. For example, if you take cover for €500,000 compared to €250,000, you will pay a higher monthly cost than the latter. This same principle applies to how long you take cover for. So if you took 20 years instead of 30 years, it would be cheaper.
Type of Policy Chosen
As we discussed in the section above, there are different types of policies when it comes to life insurance. Term life insurance is far more affordable because there is a set end date. Whole of life insurance premiums cost significantly more because it lasts your entire life, and you’re guaranteed a payout.
Our 4-Step Process to Securing Your Plan
We make choosing your life insurance plan easy with our simple 4-step process. We handle all of the complex processes involved, ensuring you get the best cover suited to your individual needs.
Step 1: Initial Consultation & Needs Analysis
Our journey together begins with a free consultation where we listen to your financial situation and long-term goals for you and your family. The goal here is to get a deeper understanding of your insurance requirements to provide you with a tailored plan.
Step 2: Market Research & Recommendation
We conduct extensive market research and are not tied to any single provider in the Irish insurance market. This gives us the freedom to provide our clients with unbiased recommendations, to provide you with the best policy at the most competitive price available at that time.
We act as a Broker, which means that the principal regulated activities of the firm are provided on the basis of a fair and personal analysis of the market.
Step 3: Application & Underwriting Support
The application process is confusing and complex, but we handle it all for you. We will assist you with completing all necessary forms accurately and help with any underwriting if required. Our thorough assistance ensures your application progresses as smoothly and efficiently as possible.
Step 4: Policy Issue & Annual Reviews
Once your application is approved, we confirm that your policy is active and your family is fully protected. Our service doesn’t end there. We believe in building long-term relationships, so we schedule an annual review to ensure your policy continues to meet your needs as your life and circumstances change over time. We factor in any employer death-in-service benefits when setting and reviewing your required cover, so you don’t over- or under-insure.
Get personalised advice on Life Insurance. No obligation.Speak with a Qualified Financial Adviser
Information only; not personal advice until we assess your circumstances.
Why Choose Roger Carragher?
Choosing Roger Carragher means partnering with an experienced advisor committed to your family’s financial security. As Qualified Financial Advisors (QFA) regulated by the Central Bank of Ireland, we provide unbiased access to all major Irish insurers clearly and efficiently. We will hold your hand every step of the way, and be proactive in annual policy reviews, ensuring financial protection and peace of mind.
For further guidance and independent information, see the Competition and Consumer Protection Commission’s Life Insurance Guide.
