Life Insurance 101

Life insurance provides you with a solid foundation for your overall financial planning, but most importantly, it provides a safety net for you and your family should the worst happen.

Sinead McHale is a Financial Planner at Zurich. In this vodcast she talks to Ronan O’Neill about all things life insurance related and this article turns that discussion into a structured guide, helping you understand the different types of protection available in Ireland, how they work together, and how to decide what’s right for you and your family.

We also outline how much cover people typically need, what influences premium costs, the role of underwriting and honesty, the distinction between employer benefits and personal policies, and Zurich’s approach to claims and supporting customers in returning to work.

Zurich is one of Ireland’s leading providers of life insurance, protection, pensions and investment solutions, with a strong presence through Zurich Life Assurance plc in Blackrock, Co. Dublin. From mortgage protection and family life cover to serious illness, cancer cover and income protection, Zurich supports customers in building financial security and resilience at every stage of life.

With an inhouse Financial Planning Team, Zurich offers personalised guidance and tools to help customers make informed decisions about their protection needs.

1. Setting the scene: Why life insurance matters

Life insurance is perhaps one of the most important forms of protection you can take. It provides you with a solid foundation to your financial plan, but most importantly, it provides a safety net for you and your family should the worst happen.

Many people only think of life insurance when something big happens such as buying a home, having children, or seeing friends and family go through serious illness. Sinead McHale, who speaks to customers up and down the country every single day, brings that real life experience into what could otherwise be a very technical topic.

Both Sinead and Ronan agree that life insurance isn’t just one thing; it’s a range of related protection products that work together to secure your family’s future.

2. The four core types of cover

Ronan sets up the structure clearly: there are four main covers they want to focus on:

1. Mortgage protection
2. Term / family protection
3. Serious illness cover
4. Income protection

They also later introduce cancer cover as an additional, more focused option.

2.1 Mortgage protection

Mortgage protection is taken out when you are purchasing a home. This type of insurance is to pay off the outstanding mortgage on your home in the event that you die. 

Sinead calls mortgage protection: “probably the most common type of life cover,” because in Ireland, you are required to have mortgage protection before you can draw down your mortgage. “It’s basically a life cover which decreases in line approximately with your mortgage.”

Key characteristics:

• It is a form of decreasing life assurance.
• As your mortgage balance reduces, the level of life cover under the policy also reduces.
• If one of the people named on the policy dies during the mortgage term, the outstanding mortgage is paid off.

Ronan summarises it in simple terms: “You take out mortgage protection to cover the amount that you owe on the mortgage and if you or your partner die, your mortgage is paid off. And the remaining person owns the house outright.”

Mortgage protection is there to protect your home, ensuring that your loved ones are not left with mortgage debt they might not be able to afford on a single income. 

2.2 Term protection / family protection

Once the mortgage is protected, there is still everything else in the household budget to consider. Ronan notes that this type of cover is called many things: term protection, life insurance, life protection, life cover.

Sinead often refers to it as family protection, especially when speaking to clients with children. “It’s a form of life cover where you take out the cover for a period of time, so it could be a term of 25 years, for example.”

You choose a term (e.g. 25 years) and a sum assured (e.g. €250,000). If you die during that period, a lump sum is paid out to your beneficiaries.

Sinead explains that for families, the core purpose is to ensure there is money available to help raise children, cover school costs and manage day-to-day living expenses.

Ronan reflects on his own experience: “When I look at my bank statement my mortgage payment is my largest single payment, but all the other things add up to far more. Mortgage protection clears the mortgage, but term/family protection helps cover everything else.

Sinead highlights a benefit people don’t always think about - allowing the surviving parent to reduce their working hours. “If they’ve young children, they might decide to work part time for a number of years. The lump sum from family protection can effectively buy time and presence for a bereaved parent and children, not just pay bills."

2.3 Serious illness cover

The first two covers are triggered by death. Serious illness cover, by contrast, is there to support you if you survive, but with a life-altering illness.

Sinead describes it as cover for “a life-altering illness”, typically including cancer, heart attack or stroke. These are among the main conditions that Zurich pays serious illness claims on each year.

Serious illness can have major practical consequences:

• Long periods out of work (often 12–24 months in the case of cancer).
• Travel and parking costs for hospital visits.
• Food and incidental costs during treatment.
• Reduced or no income, especially if your employer does not provide long-term salary protection.

The cover pays a lump sum – for example, €50,000 – which you can use as needed.

“It can help pay your mortgage, can help pay the bills, keep the car running, essentially keep the show on the road from a financial perspective,” Sinead explains.

Ronan adds: “From speaking to friends and colleagues who have gone through serious illness, financial pressure is a huge source of stress. A lump sum doesn’t fix the illness, but it can relieve the financial strain at a critical time.”

2.4 Income protection (permanent health insurance)

“It does kind of what it says on the tin. It covers your income if you’re out of work due to illness or injury for a period of time,” Ronan explains.

Key features:

• Can cover up to 75% of your income, less any State illness benefit that applies.
• You can choose a lower level than 75% if you wish.
• Designed for medium to long-term absences due to illness or injury.
• Pays you a regular income while you are unable to work.

With income protection, you choose a deferred period – the time from when you become unable to work to when your benefit starts paying. Common options are: 13, 26 weeks or longer depending on needs and affordability. 

Sinead explains that a key part of her discussion with clients is looking at their emergency funds. “They might say, ‘I have plenty of money there that I could pay the bills and everything for six months.’ So, they might want to take their income protection out after six months, if they are still out of work,and that's when the income protection will start paying.”

Ronan points out that people often think they can “just use the money in the bank”, but that money is usually meant for a rainy day – and you don’t really want that rainy day to be along-term illness.

Income protection is there to protect your income, while letting your savings remain what they were meant to be: a buffer, not along-terms salary replacement.

3. Additional protection: Cancer cover

Beyond serious illness cover, Sinead explains that Zurich also offers a more focused product: cancer cover.

It is a specific benefit that covers cancer only. It is typically more affordable than full serious illness cover because it covers a narrower set of conditions.

“Serious illness can be a little bit more on the expensive side because it does cover you for a vast number of illnesses, where cancer cover just specifically covers you for cancer.”

Given that cancer is a major cause of serious illness claims, particularly among women, cancer cover can be a cost effective way to build protection where budgets are tight.

4. When families start asking: “what if?”

Ronan shares a real-world example of a colleague returning from maternity leave after her second child. Amid the usual conversations about the joys and stresses of parenting, she and her friends are now starting to have that: “what if something really bad happened?” conversation.

According to Sinead, this is very common as people move into their 30s and 40s and start focusing more on family protection. When she speaks to clients with families,she stresses the importance of ownership and talks about:

• Having life cover in place (not just relying on employer benefits).
• Adding serious illness cover or cancer cover.
• Ensuring they have taken control of their own cover and chosen the right level, rather than simply accepting whatever is provided by default.

5. Going it alone vs getting advice

Ronan asks: “Do people go it alone? Do they decide what cover they need themselves or what’s the best thing for people?”

Sinead explains Zurich’s approach. “A member of the Zurich Financial Planning team will conduct a financial review with each client. They assess needs and make recommendations on the level and mix of cover. Crucially, they factor in affordability.

She emphasises an important point: “It’s better to have some sort of cover in place than have no cover in place. If your budget allows only a certain monthly premium, that’s fine; the adviser will work within that to put useful cover in place. The goal is not perfection, but meaningful protection given your circumstances.”

For tools that can help you start thinking about your own situation, Zurich offers various calculators and planning supports online.

6. What affects the cost of your premiums?

The cost of life insurance and protection cover is influenced by several factors. Sinead lists the main ones:

• Age
• Existing or previous medical conditions
• Term of the policy (how long the cover is in place)
• Amount of cover (sum assured)

Why it’s cheaper when you’re younger

Sinead says she often speaks to younger couples taking out mortgage protection. She encourages them to also consider term/family protection at that point – even if they don’t have children yet.

“You may not have a family now, but it could be something that you might want in the future. The younger you are taking out the cover, the less expensive it is going to be for you.”

In your 30s or early 40s, you are also more likely to be in better health with fewer medical conditions such as high blood pressure or high cholesterol. These conditions become more common as we age and can increase the cost of cover.

Should people with health issues still apply?

“Yes. Even if you do have any health conditions, still apply for your life cover. We cover people with an array of [conditions] whether it’s BMI or whether it’s diabetes or asthma. Even if there are medical issues, you may well still get cover – possibly on adjusted terms – and applying earlier is better than waiting, as conditions can escalate over time.”

7. The underwriting process

Ronan raises a natural concern - the number of medical questions in the application process. “We ask a lot of medical questions. Should people be concerned or put off by that?”

Sinead explains that underwriting is there to help Zurich understand your health and risk profile, make a fair and informed decision and put the right cover and terms in place. So, “the more information you can give us, the better.”

Ronan adds a crucial reminder: “More importantly, we want to pay the claims. So, when you are providing us with the information, be 100% honest.” Honesty at application stage helps avoid issues at claims stage and gives you confidence that if something does happen, your cover is robust.

Extra underwriting for serious illness and cancer cover

Because there is a higher chance of a claim on serious illness or cancer cover than on standard life cover, there can be more detailed underwriting, such as additional GP reports and more detailed medical histories.

Sinead reassures that this is to make sure the insurer has everything it needs so that, when a claim arises, there are no problems paying it.

8. Employer benefits vs personal cover

The conversation turns to employer provided benefits such as death-in-service cover. This is a type of life cover provided by employers, paying out a multiple of salary if you die while employed there.

Sinead’s advice is to treat it as ‘bonus cover’. “If you leave that employer tomorrow morning and move to another employer, you may not have that death-in-service in place. It doesn’t always travel with you if you move employments.”

Therefore, while it is a valuable benefit, it should not replace having your own, portable life cover that stays with you regardless of job changes.

9. Serious illness vs health insurance

Many clients tell Sinead they don’t see the need for serious illness cover because they already have private health insurance.

She explains the distinction clearly. “Health insurance pays hospital and medical bills and serious illness cover pays you in the form of a lump sum, to help with income and lifestyle costs. This is to help you financially so you’re not having to rush back to work… you can take that extra time, and you can take that time to recover.”

You might use the serious illness payment to cover mortgage and household bills, replace income while off work, fund extra therapies or supports or reduce working hours during recovery. 

10. Tailoring cover for different family members

One of the strengths of Zurich’s protection range is its flexibility. Sinead gives an example. “For women, cancer – especially breast cancer – represents a very high percentage of serious illness claims. For men, a higher proportion of serious illness claims relate to heart attacks and strokes. Because of this, some couples choose different mixes of cover.

“I’ve often had a couple where they’d prefer for their wife to have a higher level of cancer cover and the husband to have an average level of serious illness cover. Just based on the risk factor.”

This illustrates that protection does not have to be identical for both partners. It can be tailored to risk profile, budget and family dynamics.

“It’s not a one size fits all. Everything can be tailored. We want to give our clients choices and affordable options.”

11. Claims experience

Towards the end of the discussion, Ronan highlights Zurich’s claims statistics. “When I look at our claim stats in protection, income protection is perhaps the number one product that we pay out on.”

Sinead notes that awareness of income protection has grown substantially. “People are a lot more aware of income protection now than they would have been 10 years ago.”

Supporting return to work

Zurich’s approach is not just about paying the claim; it’s about helping people get back to work where possible. “We will offer you other services to help you get back to work. That might be referring you to a specialist for tests, or it might be getting you extra physiotherapy.”

This is important because the longer someone is out of work, the harder it can be to return. Income protection with rehabilitation support therefore serves a dual purpose:

1. Financial – replacing income so you can pay bills, mortgage, and day-to-day expenses.
2. Health and vocational – helping you recover and reintegrate into work, where possible.

12. Key takeaways and next steps

“We covered all the aspects of life insurance. And remember, life insurance is more than just one product. There’s mortgage protection, there’s life cover, there’s serious illness, there’s cancer cover. And of course, there’s income protection,” Ronan concludes while reiterating the key points:

• Start early: Cover is typically cheaper and easier to arrange when you’re younger and healthier.
• Layer your protection: Mortgage protection, family life cover, serious illness/cancer cover, and income protection each do different jobs.
• Don’t rely solely on employer benefits: Treat death-in-service as a bonus, not your only protection.
• Be honest in applications: This helps ensure claims are paid smoothly when needed.
• Tailor to your family: Different levels and types of cover for each person can make sense.
• Some cover is better than none: Even modest protection can make a huge difference.

Sources:

*Zurich Claims Report 2024

**Correction: Male life expectancy at birth was 80.9 years in Ireland in 2022, the second highest in the EU27 and three years above the EU27 average. Female life expectancy at birth in Ireland was 84.2 years, which was eighth highest and 0.9 years above the EU27 average.

***Stay-at-Work/Return-to-Work Toolkit, The Council of State Governments, 2018, p. 7, citing Zurich Insurance and Disability Management Employer’s Coalition, 2015, “Early Intervention & RTW Best Practices.”