DOMINIC COYLE answers your queries

Counting the rising cost of life and illness cover

Q

I have maintained a Survivalplus (lifecover, illness and disability cover) plan with Irish Life for the past 25 years for my wife and myself.

The company has written recently to inform me that the fund value has now fallen to the extent that the benefits under the plan will be cancelled if the cover is not reduced or the payment level increased.

I am paying €64.76 per month for life cover of €82,533, illness cover of €39,362 and disability cover of €30,362. To maintain this level, the revised payment would be €109.94 per month. The alternative is to continue paying €64.76 for reduced life cover of €57,324, illness cover of €27,339 and disability cover of €27,339.

Irish Life also offers a third option of payment of €87.34 for life cover of €69,694, illness cover of €33,239 and disability cover of €33,239 for both of us.

I am 52 years old and my wife is 49 and I am wondering what the best option is. Any advice would be appreciated in making this decision.

- Mr TS, Limerick

A

There are various types of life cover available to suit people’s particular needs at any given time. It is not unusual for some policies to offer a relatively low initial premium with provision for periodic reviews. In part, this is because the cost of providing such cover with a level premium for the whole of your life would be so prohibitive that few people could consider it at the outset.

Inevitably, these reviews lead to increases in the premium; the older you are the greater the likelihood that you will need to use the life, illness or disability cover, and the higher the risk for the insurer.

But there are options. You have had this policy for 25 years and it is certainly an opportune time for you to assess the level of life insurance you require. It may be that, after 25 years, children have been reared and become independent and claims on your income for education and mortgage might have fallen.

You may also find that you have other insurance cover through your employment, attached to any mortgage you may hold or simply via other policies you may have taken out over the years.

I would suggest a review of your life, illness and disability income requirements before you agree to any new, higher premium and also, if necessary, a review of other products on the market that might suit your needs at a lower cost.

Clear line between valuers and surveyors

A

Further to a question a couple of weeks ago from Ms DK in Galway about Ulster Bank’s refusal to accept an assessment of rebuilding costs based on the annual guidelines from the Society of Chartered Surveyors in Ireland (SCSI), a chartered engineer who is involved in structural house surveys and insurance matters relating to housing was in touch to note that ignoring the SCSI figures is unheard of in his experience.

More significantly, he notes that the “panel of valuers” used by lenders is usually made up of estate agents who are qualified to provide an opinion on the market value of a house but not to comment on construction costs.

This only strengthens Ms DK’s case when it comes to challenging the significantly higher reinstatement cost required by Ulster Bank through the bank’s complaints procedure.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.

Please send your queries to Dominic Coyle, Q & A, The Irish Times,24-28 Tara Street, Dublin 2. E-mail: dcoyle@ irishtimes.com