Case study Irish Life Lifesaver account

Funnyname

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Hi

My Aunt took out a Lifesaver Account policy with Irish Life in 1991. The policy is now being reviewed annually and the current premium is circa €800 per quarter for life cover of €55,000. No doubt the fund is exhausted so there will be zero encashment value. In 2014 the premium was circa €670 for the same amount of life cover.

She took out this policy when she was 59 only a few years away from retirement and with all her kids having flown the nest.

I've read a few things on this type of policy on this site (threads are old and I didn't want to restart one of them) and other places and there isn't much positivity about this product.

I think she got very bad advice at the time she took out the policy and has blindedly continue to pay the premium as it has gone up at each review period. She mistakenly thinks she might have some encashment value in the policy but I haven't broken the news to her that the policy is only worth money when she dies.

I don't know how much she's paid into this policy over the years but given that premium has gone up by about 20% over the last year so based on this annual inflation (I know it won't be this every year but using it in this example the table below is the expect premium (if benefit stays level) vs death cover (if premium stays flat).

Money is very tight for my Aunt and her husband at the moment and they can't afford many more increases.

Would anyone be able to suggest any ideas as to what they should do next. I think she got very bad advice at the outset, would it be worth looking into my Aunt being mis-advised/mis-sold this product with the view getting some real benefit out of her premiums as I believe she should have been sold a savings product.

Many thanks for reading, if more info required please just ask.

FN

Age Qrtly Prem Death Benefit
82.00 797.00 54,428.00
83.00 956.40 45,131.01
84.00 1,147.68 37,422.07
85.00 1,377.22 31,029.91
86.00 1,652.66 25,729.61
87.00 1,983.19 21,334.67
88.00 2,379.83 17,690.44
89.00 2,855.80 14,668.69
90.00 3,426.95 12,163.09
91.00 4,112.34 10,085.48
92.00 4,934.81 8,362.75
 
I used to have such a policy years ago.

The funds in which it was invested did well in the 1980s.

I could make cash withdrawals from the fund and often did.

The premium was increased each year (indexation). However, I could opt out of this by notifying Irish Life within something like 10 days of receipt of the letter.

I cashed it in some time in the early 90s.

Why don’t you contact Irish Life and see if your aunt can switch to a more suitable product.
 
Those reviewable contracts are a waste of money. I am guessing by the low level of cover and the age she took it out, she wanted money to cover her funeral expenses? As we don't know when we will die, taking out life cover is a solution for covering funeral expenses.

Normally I would say just cancel the policy. Given your aunts age and dependent on her health, it may not be that long before a claim is made.

You could tell Irish Life how much they can afford and ask them to calculate the amount of cover based on that amount. As you can imagine though, cover for someone in their 80's is very expensive.


Steven
www.bluewaterfp.ie
 
I haven't broken the news to her that the policy is only worth money when she dies.

Money is very tight for my Aunt and her husband at the moment and they can't afford many more increases.

Would anyone be able to suggest any ideas as to what they should do next.

Seems madness to me to be paying those premiums when money is tight (Or even if it wasn’t tight) particularly when your elderly aunt has to die to benefit.

In your aunt’s case, surely those large premiums would be far better used towards life quality while living.

According to your table, when your aunt is 90, her annual premium will be more than the €12K death benefit, and she will have paid over €65K in premiums between now and then.

If it was me, I don’t think I would be paying any more premiums on this policy.
 
Many thanks for your replies, now to break the bad news to her, i'm serious when I say I hope it doesn't send her over the edge as she thinks she might have €30,000 of value in the policy.

I wonder is the best option to engage with IL and ask them to convert the policy to a short term term insurance policy of 3 to 5 years and then take out a savings policy with the difference between the cost of that and her current premium. Therefore if she survived passed the end of the term insurance the savings might be big enough to cover her funeral costs and if she passed away before then the tern insurance covers it?

Any ideas how much a 3 to 5 year term insurance policy of say 10k would cost a female somker turning 83 this year, expensive I'd say but I can find anything from online calculators as that's outside their age range.

Also if IL changed the policy to a term insurance policy of say 3 to 5 years would they start from scratch or use existing data.
 
Hi

Also my uncle has a select investment plan with Irish Life, he is currently paying in about €230 a month into this.

I've anyone know what this is, I've googled but can't find anything substantive.

Current plan is to get my Aunt to phone IL on Thursday do the identity checks and then take over and ask them for some options and if no good ones are offered check what's available in the market.

Am I able to do that re the call?
 
Select Investment Plan was pretty much the same as a Life Saver except it paid less intermediary commission.
 
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