FAQs

on motor insurance
on life insurance
on home insurance
on pension

FAQs

Motor Insurance

  • Motor insurance protects you as a motorist against liability in the event of an accident that you may cause. Motorists are legally obliged to have motor insurance under the Road Traffic Act, 1961.

  • Optional extras vary from company to company. Extra benefits can include: No Claims Bonus Protection, windscreen cover, damaged/stolen personal items, emergency/recovery service, cover for a rental car in the event of your own car being off the road.

  • It is vital that you disclose all relevant information to an insurer when initially purchasing or renewing your insurance. Otherwise, the insurance policy you purchase may subsequently be deemed null and void. If you are unsure whether certain facts are relevant, you should disclose them to the insurer and it is then up to the insurer to decide.

  • Please click here for more information on premiums.

  • Insurers typically offer a premium discount for motorists with a claims free record. Policyholders are typically awarded a percentage discount on their premium on a sliding upward scale for each year of claims free driving up to a maximum of five years. The increased percentage discount awarded for each year can vary from insurer to insurer. However, it’s a no-claims discount, not a no-blame discount. Once you or a third party make a claim against your policy (even if you are not to blame for the accident), your discount will be affected. You will be able to rebuild your discount if no subsequent claims are made.

    Most insurers will offer you the option of purchasing protection for your no-claims bonus. This means you may be allowed to make claims without fully losing your no-claims discount.

  • Firstly, you should contact your insurer and advise them that you wish to take your car abroad. Normal terms and conditions of motor policies allow a policyholder to take his/her car abroad for up to 31 days to another EU member state for no extra charge. Your existing cover can be extended for stays of up to 60 or 90 days duration but you may have to pay an additional fee for this cover. After your extended cover expires, you have the minimum cover required by law in each country visited (i.e. no comprehensive or fire and theft) until your policy is due for renewal.

  • Where you have the benefit of Open Driving, anyone is insured to drive your vehicle with your permission. Permitted drivers have the benefit of full policy cover. Open Driving is commonly restricted by age, for example, it may apply to drivers aged 25 years and over with a full licence and clean driving record.

    Driving Other Cars is a policy cover extension that allows the policyholder to drive a car not insured or owned by him/her. It typically provides cover only against third party risks, i.e. it does not cover damage to the vehicle being driven. Only the policyholder has the benefit of Driving Other Cars cover. Driving Other Cars cover is subject to several conditions, not least of which is that it does not apply to cars that are owned by the policyholder.

  • Driving other cars is a policy cover extension that allows the policyholder to drive a car with the permission of the owner that is not insured or owned by him/her. It typically provides cover only against third party liability, i.e., it does not cover material damage to the vehicle being driven. Only the policyholder has the benefit of driving other cars cover. Driving other cars cover is subject to several conditions, not least of which is that it does not apply to cars that are owned by the policyholder.

FAQs

Life Insurance

  • A policy under which the policyholder makes annual/regular payments of premium to finance life assurance protection cover or to build up an investment or retirement fund.

  • Critical illness insurance pays the policyholder an agreed sum if he/she contracts one of the illnesses specified under the policy conditions. Typical illnesses covered include cancer, stroke, heart attack, multiple sclerosis and kidney failure.

  • Personal Retirement Savings Account (PRSA) is a type of personal pension.

  • A lump sum life investment or pension policy under which the policyholder makes a one-off payment to the life office. The life office uses the money to provide life assurance protection or invests it on the policyholder’s behalf for repayment, with investment gains, at the end of the policy term (or in the case of a pension, purchases retirement benefits for the policyholder at retirement).

  • Income Protection Insurance is a protection policy that provides a proportion of income if the policyholder is unable to work because of sickness or disability. Each policy includes a “deferred period”. The individual must be off work because of illness for longer than the deferred period before an income is payable under the policy. The deferred period is usually 13, 26 or 52 weeks. Cover is available on an individual or group basis (e.g. where an employer establishes a scheme for employees).

  • AVCs are extra savings you can decide to make to your pension policy. This will increase your retirement benefits.

  • An annuity is a policy which will pay an income to the policyholder until death, regardless of how many years that will be. There is no associated surrender value with this type of policy.

  • An Approved Retirement Fund (ARF) is a pension to which certain retirement benefits can be transferred at retirement. The money is invested with a qualified fund manager and a range of investment options is available. This means that the pension can continue to be invested while you take an income.

  • An Approved Minimum Retirement Fund (AMRF) is similar to an ARF but cannot be withdrawn until age 75. There are detailed Revenue qualifying rules around the availability of ARFs and AMRFs. From January 2022, AMRF’s will be abolished and your fund will move to an ARF.

  • This is the most basic form of life assurance. You pay a regular premium over a defined period of time (e.g. 10, 20 or 25 years) and in return the policy guarantees to pay out a specified sum if you die during that period. There may be options to have the specified sum increase in line with inflation or have a joint policy with your spouse, however you should note that this will impact on the level of the premium. There is no investment element to this type of policy so if you survive the term of the policy, there is no payment or refund, the policy simply stops.

  • As with the term assurance policy, whole of life assurance is a protection product which promises to pay out an agreed sum on your death. However, in this case, there is no time limit on the term of the policy. Once the policy is taken out, the policy can continue uninterrupted for the rest of your life, as long as the premiums continue to be paid.

FAQs

Home Insurance

  • A broker can obtain quotes from a number of different insurance providers in order to get the most competitive quote for the cover that you need. Brokers are required to disclose any commission that they receive from an insurer, so you can compare any additional cost of using a broker as opposed to carrying out this research yourself.

    When buying home insurance, it is important to shop around to get the best policy for you, particularly if your own circumstances have changed over the year. It is also worth considering whether there have been any changes in your circumstances which might let your current insurer charge you a lower premium. For instance, if you have recently fitted a monitored alarm to your property, it is worth checking whether your current insurer offers a premium discount.

  • The more information you have about your house and contents to hand, the easier it will be to obtain a quote. You will need to know things like, what is the rebuilding cost of your property, the types of locks on your doors, whether or not there is a monitored alarm on the property, details of any renovations and the types of windows on the property. Having a previous application or policy to hand will help with this.

  • The Society of Chartered Surveyors Ireland (SCSI) provides a house rebuilding calculator and a reference guide on house rebuilding costs, which outlines minimum values for which the structure of a house should be insured. These are very helpful guides for consumers in estimating their rebuilding costs.

    The basis for setting sums insured of a household insurance policy is normally the full cost of reinstating (rebuilding) the property. Renovations such as new extensions, expensive building material, fitted kitchens etc are all likely to increase rebuilding costs, particularly if any specialised materials are used.

    Using the market value of a property is not a good basis for valuation of the building sums to be insured. The market value includes the cost of the land, which is not appropriate for the purposes of rebuilding the property, and the market value is also partly determined by a range of external factors such as housing availability, the wider economy, inflation, and the area where the property is located.

  • When shopping around it is standard practice for insurers to ask you about your claims history when assessing risk and developing a premium. The length of time a historical claim is relevant to an insurer for underwriting purposes will vary from insurer to insurer.

  • Standard construction normally refers to building construction that is substantially of non-combustible components, e.g., block, brick and concrete walls with slate, tile, or other non-combustible roofs, but these wordings vary from insurer to insurer.

  • For consumers who present non-standard risks, it would be beneficial to contact specialist brokers who are experienced in arranging and advising on such cover with insurers.

  • Insurers will generally offer a greater level of discount for on a home insurance policy where a property had a monitored alarm that is serviced and well maintained over alarms that are not monitored, or properties where there is no alarm at all.

  • It would not make sense for someone to make a claim below the amount of their excess and any claims made may affect their no claims bonus and have a knock on effect on their individual premium.

About Pension

  • Pension planning means that you put some of your income aside during your years in employment so that you have savings to provide for your retirement. Very often, many of us underestimate the amount of savings necessary to provide an adequate income in retirement. The amount of income you will need in your retirement will depend on your personal circumstances when you retire.

    You need to be aware that retirement brings a big change in life. There will be new bills to pay. And you should not be forced into a lower standard of life just because you are no longer working.

  • If you're planning a long break or a big move, mention this to your financial advisor. They'll be able to help you keep your pension ticking over as you get on with your life.

  • When you take out a pension, your contributions may be invested in different funds. To choose which funds are more suitable for you, you should work out what type of investor you are.

    Three questions you should ask yourself to know which kind of investor you are:

    1) What level of investment risk are you willing to take?

    2) How long are you looking to invest for?

    3) How much control do you want over what you invest in?

    Your financial advisor can help you decide your risk profile, so you can balance potential returns against potential risks.

  • Yes, you can transfer your pension benefits if you’re a member of a company pension scheme or if have a personal retirement savings account (PRSA). You’ll need to get the receiving scheme to confirm that the pension benefits will be similar to what you are transferring from and it’s approved by the country’s pension regulator.

  • An example of how this works is set out below:

    If you make a monthly pension contribution of €100, you can obtain tax relief at 40% (if you are a higher rate tax payer) which means that the cost to you is €60.

    If you pay income tax at the standard rate of tax which is 20% , your tax relief will be €20 and your total net monthly cost will be €80.

  • A company pension is a plan set up by your employer. Your employer will make payments into the pension on behalf of you and you can also make payments. The plan is owned by trustees who are appointed by your employer.

  • Additional Voluntary Contributions (AVCs) are extra contributions you or your employer can make in addition to your existing company pension. Thus, employees in a company pension plan can boost their pension savings to provide a greater income in retirement.

    When you retire, your AVC contributions need to be taken in the same way as the benefits from your company pension scheme.

    You can claim tax relief against AVCs, subject to revenue limits. And your investment growth won't be taxed.

    You can make contributions to your AVC through your employer, or by yourself. Making contributions through your employer is usually the most straightforward, since each contribution can be taken from your salary. If you make personal additional contributions you'll have to claim tax back from Revenue.

  • An executive pension is a company pension policy set up by an employer under trust to save for a key employee’s retirement.

    The employer company makes a contributions on behalf of the employee towards his/her pension.

    Both employees and employers can avail of tax relief on their contribution.

    The policy holder does not have to be an executive to take out an executive pension plan. Rather, it is designed for employees, company owners or company directors who wish to save for their retirement.

    On retirement, you can take a tax-free lump sum of either: i) 25% of your fund; or (ii) based on salary and service, to a maximum of 150% of salary. The maximum tax-free lump sum you can take is €200,000.

  • A self-administered pension scheme may be suitable for experienced investors, who want to manage their pension fund investments themselves.

    It gives you access to invest in a range of fixed-interest and equity securities, and should be considered a high-risk investment.

    It is a product for experienced investors, looking to have the option of more control and direction over their investments.

    As with a managed pension, you can make regular monthly contributions towards your pension funds.

FAQs