It is probably entirely coincidental, but the two companies that have announced plans to demutualise are both giving away special offers this week. the The First National Building Society will provide a cash voucher to buy electrical goods if you take out a five-year, fixed rate mortgage and Canada Life is offering double the life insurance cover for the same annual premium.
Canada Life, which goes public late next year, is offering double life cover free for customers who take out a Protection Options Plan policy before May 29th up to a maximum value of £200,000. In other words, if you take out £50,000 worth of cover, you get £100,000. The maximum is £100,000, i.e., £200,000.
The free insurance lasts for just year after which you revert to your original cover and premium. You can maintain the double value cover, but at the appropriate price at the time.
Aside from being good value for the year, this offer will hopefully highlight the fact that for many people, the doubled amount is probably the level they should be insuring their lives for anyway. Surveys conducted by Irish life companies and the Irish Insurance Federation regularly show that about half all Irish adults either have no cover at all or, of those who do, at least half again are seriously underinsured, with average cover as little as £20,000.
The IIF recommend protection in the order of 14 times salary (though this should take into account any death-in-service benefits, occupational and state pension benefits to dependents, mortgage protection insurance that will clear mortgage loans, etc). Financial advisers recommend that a person with dependants needs to ensure that investment returns from their death benefits, will replace the provider's income and take into account factors such as higher tax liabilities.
Canada Life are not the cheapest term assurance providers on the market that distinction goes to Equitable Life, especially for smokers, and then Irish Life but their rates are within a couple of pounds per month of the other companies on the market.
A 25-year-old male can buy £100,000 worth of term assurance over 20 years for about £12 a month from Canada Life and a few pounds cheaper again from Equitable Life, Guardian Life and Irish Life. A 35-year-old will pay an average of £17 a month and a 45-year-old will pay between £35 and £45 a month. Women will pay proportionately less again. Canada Life's one-year offer is attractive, but it will pay over the longer term to have a broker or financial adviser check out all rates in this increasingly competitive market.
