Life New continuation policy from New Ireland

G.Weatherwax

Registered User
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Hi All,

Spotted this article when shopping round for a new life insurance policy today. What do you think? It seems like the 2nd policy costs a good bit more but at least there would definitely be a payout to someone at somestage. Not 100% clued in to the vagaries of life insurance & I will be getting advice on it but this seems like a good option

[broken link removed]
 
This is a feature of one of New Ireland life stage plans. The whole of life continuation is a v good idea, they also have options for income on death rather than a lump sum
Payment which is also an innovative idea.


Www.powerinsurances.ie
 
That how much.ie comment is the biggest load of .. I've read. There is no revolution - except in commission payments perhaps? As always the term of a policy should match a persons need for life assurance. There are plenty of ways of getting statistics to prove what you want them to prove. Not everyone needs life assurance and most certainly don't need whole of life cover.
 
Sumatra, you are missing the point of this new type of policy. Once the premiums are paid for the full term of the plan then more is paid out than was ever paid in when the policy holders die.

New Ireland are counting on lapses to make it profitable but say someones premiums are €20k over the term of the plan, the guaranteed payout is practically doubled (or more) even though you have stopped paying the premium at the end of the term. I recommend you look at some quotes on this product before you belittle it.

Simplified Example

Male non smoker age 35 next birthday
Term 20 years
Sum assured €25000
Life continuation €20000
Total annual premium approx €288 per annum

Total amount paid in over 20 years = €288*20 = €5760
Amount paid if client dies during term = €45000
Amount paid if client pays all premiums for 20 years and dies after term = €20000

Its debatable if you put the money in a savings account for that long whether you would get as good a return never mind you have life cover as well.

And before anyone says it, I agree it does look too good to be true but New Ireland obviously think they can make money on lapses.


www.CheaperLifeAssurance.ie
 
I'm certainly not missing the point. This fellow recommends a 35 year old couple should take out a life assurance policy for €30,000 for the rest of his and her lives? Good way to get them to increase their spend up to €76 a month now. Couldn't the money be spent in a more cost effective and beneficial way?

What if one of them dies age 40 what good will €30k be to a family or the remaining partner who as he says will have to live another 40 years?

The intro reads 'Life cover for you and your family for free'. If the definition of a family is one or more parents and their children then what he is saying is worse still.

I don't put my signature at the end of what I write so I don't have to worry about how New Ireland feels when I call a spade a spade by seeing their product represented in this way.
 
First off, people dont pay the premium for the rest of their lives, only for the term. Show me another life assurance product that guarantees to give your estate your money back with interest so long as you pay the premium for the term. This product is value for money.

Secondly, many people would like to leave some money to their family when they pass on. People ask financial advisors for policies to provide this all the time.

Thirdly, your argument about what use is €30k is nonsense, €30k is better than nothing and far less than the amount paid into the policy and it could help pay college fees or other bills.

I can see your objection to the word free in connection to the cover after the term being free as effectively you have been charged during the term of the plan, but to rubbish the plan over this takes away from the fact that the plan structure is new to market and will be suitable to a vast number of people.

I dont often defend insurance companies but in this case I think you are being particularly hard on what is a good product.
 
First and second - I understand fully how the product works but it was never intended to be marketed in this way. If as per Mr Dowling's illustration you call it value for money then you clearly don't appreciate the eroding effects of inflation on that €30,000 payout. For goodness sake by the time they come to claim on it you couldn't even call it a decent funeral plan let alone an inheritance or savings.

Thirdly - realistically what college fees will this couple have in their 80's? If you mean the 35 year old couple may have children today that may need to provide for second or third level education then what justification has the chap in recommending such a package at €76 a month. I'm sure the remaining partner would appreciate the advice that left him/her with a €30,000 cheque to see the family through when they could have had €250,000 for the same price.

New Ireland never endorsed the way it has been presented so they don't need defending.
 
Just to give an opinion here and hoping that no one will cast any insults;) Sumatra I think you need to read the blog again Option 2 would payout a total of 250,000 (220K term cover+30K WOL) if the assured were to die before the age of 65 and if that person were to survive thereafter they would not be paying for the policy....(just to say as well that I do not hold an agency for NI or have any kind of connection to them)

I think this policy will fill a certain gap in the market. Over the years i have had many clients come in and ask for financial advice just to turn round and completely ignore my advice entirely and do their own thing. Good advice IMO would be to take out the highest level of term cover until the kids were age 25 but in the mean people would see this type of policy as good value for money and purchase it based on what their budget could afford without considering whether the lumpsum would provide fully for their family. The other side of the argument would be that it could encorage more people to take out life cover as they would see it as a cost neutral means to providing life cover. What I am trying to say is that it will suit some people and with proper and full consideration by the client for the merits of this type of policy and a regular term policy I think that it is a step in the right direction!
 
The title - LIFE COVER FOR YOU AND YOUR FAMILY FOR ” FREE”. and URGENTLY REVIEW YOUR LIFE POLICY AND GET FREE COVER AND MAKE A PROFIT.

Do you agree? Should a couple in their mid thirties with a family take heed of this?

Thanks for your opinion and welcome. Look at the cost of option 2. I can't see the value of €30,000 in 30,40 50 or 60 years. What would that amount be worth in real terms?

Ten years ago there was a run on especially Norwich Union / Hibernian's and to a lesser extent the Term 100 guaranteed whole of life products because in theory if you lived to be 100 the sum assured would be worth considerably more than you paid in and with indexing of premiums and life cover the figures were even more impressive. There was a run on such policies until they were repriced because people were keeping them and not lapsing. Yes many lapsed because they couldn't afford the premiums out of retirement income but from a pricing point of view New Ireland's product isn't in the same league but some financial advisers would like to think so.

There is a gap but a financial adviser should be able to put across the fact that the cheapest most cost effective form of life assurance is designed to give peace of mind at a reasonable cost and is not intended to provide a cash sum if no claim is made. People do not need life assurance for all of their lives so no one should feel under pressure to offer a package that appears attractive but in reality offers the consumer poor value for money. If they don't take your advice then you have it in writing. It is difficult to project a persons needs in five years time let alone 50 years time . I think the article is irresponsible. It is a poor use of a clients monthly budget and in the event of a claim grounds for suing for poor advice.
 
Folks

Please lower the temperature.

You are free to disagree with each other but absolutely no OTT language or personal attacks.

You should have a good, clean, evidenced based discussion of this policy.

Brendan
 
Yes people should take heed of this as part of a well informed decision, would you not agree yourself that you should as a financial advisor present all the information available and then based on that information and the clients needs make a recommendation? It is then upto the client to agree with you or not.

Agree with you that in 30 years the value of 30k assuming 3% inflation would give you 12300 in real terms which would bury you but in 45 years would only give you 6850 in real terms not a lot but would go a good way in funeral costs. But you fail to see that their is nothing stoping a preson taking a higher level of WOL cover to start with. Again it is all about providing full and complete info to the client to make an informed decision.

Contrasting your example of getting sued over poor advice, I could also see an advisor getting sued over not explaining the merrits of this type of policy where the client would say I could have had cover which I did not have to pay for when i reached 65, now I am retired and cannot afford life cover as i only have state benefits to live on or I just cannot afford cover as I have huge medical bills or I cannot get cover as I had a stroke when I was in my 50's

I would totally disagree with you though regarding your statement saying that people do not need cover all of their lives, some people may not need cover but other people will. I fully belive in the saying "better looking at it rather than looking for it"

All that said I do come from the same school of thought as you "protect what you have now for the lowest cost possible" I am just saying that this product fills a gap in the market and may encourge more people to take out life cover who hate paying for something that they may or may not use, this product address's that arguement.
 
So at age 80 in real terms the policy would be worth €6,850. This is close to the articles stated average life expectancy of 83 for a female and 78 for a male but as per the example is it worth paying an extra €29 a month now for that benefit? If an adviser was to explain it in terms like these then I don't think many would see the attraction and they would probably call into question the credibility of the other advice the adviser had given.

Could the same money be put to better use? Accelerate repayments on mortgage? Retirement? etc

The life cover quoted in the article is there to provide protection in a cost effective manner with a payout only on death. Unnecessarily adding a whole of life product to this to create the illusion of savings is an overstatement and misselling.

You could increase the sum assured (and the premium) but under the product discussed you are still limited to the providers max sum assured of €50k so in 45 years even if you double the figures they will still feel dissappointing and almost industrial branch.

Very slightly off track as I'm not referring to New Ireland in particular but to whole of life policies in general when you think of the large premiums and commissions these products generate especially with older lives you can appreciate the value some form of a statement of best practice for arranging and selling whole of life policies would have for the consumer.
 
The cost of the premiums is also decreasing in real terms each year in line with inflation, just focusing on the benefit decreasing in relative terms is in itself misleading.

Like it or not some people do want life assurance cover to just provide money on their death to their loved ones. Just because peoples childrens are grown up doesnt mean some parents dont want to leave a nest egg to their children on death.

Could the money be put to better use, its debatable. If there is a tracker mortgage then it arguably better at this time to keep the tracker than pay the capital down. Some banks in their infinite wisdom put penalties in place that make it uneconomic to pay off the mortgage early. Its crazy and should be changed but its still a factor to consider.
There is a huge question mark over pensions now due to government levies and reductions in tax relief incoming, it may not be worth it depending on the circumstances to put money in a pension fund. Interest rates are not much better than inflation. At the moment there isnt a lot of options open to people depending on their circumstances.

If you wanted one place to put surplus take home pay that would be better than extra money on life assurance, it would be to clear the credit card/term loans as these have interest rates that will increase due to ECB rate hikes.

I agree that reviewable whole of life policies are over priced but this product isnt reviewable and will fill a gap in the market. For many people it will be a good product.
 
The timing of death is fortuitous and assuming this 35 year old couple has provided for their young family etc etc and has a spare €29 a month, how convincing is it to ask them to spend this to protect against the possible financial consequences of death where the policy sum assured is limited to €30,000 in today's terms. You feel it is convincing and are rather downbeat on pensions etc. Think of a typical financial review. How often is it carried out yet here you are locking a 35 year old into paying premiums until 65. One cannot accurately measure today the financial consequences of death (at this level we are only talking funeral expenses and not a nest egg) which may occur anytime in the next 75 years but you can appeal to the persons perceived risk today and talk in today's terms and this is where you make the sale.

This is not life cover for 'free'. This is not an effective way to make a 'profit'.

Perhaps the package design is a way to make a profit especially if we look at it from the sellers point of view. What is in it for the seller. How much would he/her earn today selling those two options?
 
You recommend a product based on a needs analysis and a clients wishes. If a product ties you in for 20 years it isnt necessarily a bad product. Pensions tie your capital in for that and longer in some cases.

The whole idea of life assurance is that you hope you never have to use it, its peace of mind expenditure. The fact that this product will in most cases be expenditure neutral is a positive as you have had the benefit of peace of mind for all those years. Even if the inflation effect affects the eventual payout, in many cases the net effect will over the long term be cheaper than a term product where the client dies after the term ceases.

Every product is designed to make a profit for the seller, insurance companies are not charities and financial advice is rarely given for free. However not everyone is out to mis-sell products to unsuspecting customers, some of us genuinely care about our clients and try to look after their best interests while at the same time earn a modest living.
 
Have to fully agree with you Stevie, if we were to subscribe to your views Sumantra we would only write term policies for 5 years as we don't know what the clients needs would be then! This would be to the clients disavantage because the cost of the benefits per thousnad would be increaseing at the 5 year reviews indeed this would be worse than reviewable that WOL cover because the client would have to supply new medical evidence at least every 10 years assuming that the policy was converted for 5 years!

I had finished putting my point accross because I beleive that each of us is entilted to our opnions (rightly or wrongly), but again IMO an advisor should advise on all products that they hold an agency for! As I said before it is the clients who decides if the recommendation is correct for their circumstances and not the advisors decision!

The reason that I have came back to this is that I take issue when someone imply's that an advisor would recommend a particular product for an increase in commision, this may have been the case yesteryear but in today's enviroment where we need to product a "reason why letter" which must stand up to scrunity by the CBI, it is crasy to suggest that a seller would sell based on a commision!
 
Mention the word commission and you close up shop. The amount a seller earns from what they sell you does matter because it influences the product sold. Reasons why letters are for the most part generic. Check best advice etc for automatically generated reasons why letters. Disagree with me in what I say but the way in which whole of life policies are being sold these days make then next unit linked savings, endowment, unfair serious illness definition, mortgage repayment protection so if you want to be in with a chance of a claim in the future and a possible windfall - best find some one to recommend it to you. I'll leave it at that. Thanks
 
The commission on this product is the same as a regular term policy.

Please stop trashing the product, the company and independent financial advisors.
 
The total additional commission paid to the intermediary by adding on such a whole of life policy to a clients plan is an additional €732.05.

But unlike the consumer who would suffer from the ever increasing eroding effects of inflation on the sum payable on death the intermediary would pocket €444.75 immediately with the balance paid over the next 29 years.

If you consult page 11 of 'The facts' technical guide for financial advisers relating to this whole of life add on you'll see a similar example to the one in the blog [broken link removed] except the whole of life policy is intended to be sold as a 'funeral expenses' only policywith a sum assured of €10,000 (remember that is in today's terms).

There is nothing wrong with New Ireland they market the product add on honestly to 'provide funeral expenses' (see technical guide 301628 v1.10.10) NOT 'savings', NOT 'free life cover', NOT 'a nest egg' as discussed here and in the blog.

This product (and other providers whole of life offerings) is being misrepresented to financial advisers customers.

The recommendation is being driven by unnecessarily large commission payments which incorporate uplife payments. When it comes to the consumers interests many financial advisers are somewhat blinkered by what falls into their own pocket. That amount is increasing each day and this was what was forecast a few years back.

Again quoting from 'The Facts' page 19 - "Commission, PAYING YOU MORE, TODAY. Cash flow is a vital component of any successful business and in the current environment it has never been more important. We are very conscious of this fact and we are now providing you with two commission options.."


Option B (new option) This arrangement will pay you up to 125% initial commission on online cases, subject to a 3 year proportional claw back. 155% initial commission is payable on indexing policies (WOL not indexing but applies to rest of package), and on premium increases on all life choice policies, subject to a 3 year proportional claw back. Renewal commission of 3% is payable for the term of the policy starting month 13 or month 37.

Stevie, please don't try to belittle me. AAM is open so we can challenge and correct what other people say. I don't have a signature I don't drive traffic to my business I don't have an agenda.
 
Sumatra, I am not trying to belittle you. I am pointing out that this product will be suitable to some people. You on the other hand are trying to belittle an entire industry based on your biase against independent financial advisors by making out that many advisors are in it to sell products at the highest commission regardless of suitability. While there may be some rotten apples in any industry, I dont believe this is true of the majority.

Irish Life and Zurich Life offer higher commission options on regular (cheaper) term assurance policies than the one you have mentioned above. Most companies pay more commission on indexing policies, this is not unique to New Ireland. The commission structure on this product isnt out of line with comparable term or guaranteed whole of life products. You'll notice I dont mention unit linked whole of life products because like you I believe these products are not good products and I have made this point several times in other posts.

The fact that the premium is more and this means the commission is more is irrelevant. Financial advisors recommend products on suitability to the client not just price, just because one product is more expensive than another does not make it a ripoff, it simply means that the product could be better or more suitable to that particular client than the cheaper one.

I am all for people having different opinions on AAM but I am against the kind of generalisations you are propagating against financial advisors by insinuating that many financial advisors dont care about their clients and are simply in business for short term gain.
 
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