VHI & LAYA Healthcare Mortgage Protection and Life Insurance ..Not all that they are cracked up to be……
VHI and Laya have dominated the private healthcare market for many years now with a vast array of policies that cover every health eventuality with one thing in common … their prices never stop rising. Whilst many of their innovations like the Swiftcare Clinics and the online chats with doctors and nurses are very helpful, their forays into life insurance may be less so as the Irish consumer gets a lot less bang for their buck compared to the cover offered by the traditional life companies.
The mantra of shopping around is slowly being adopted by Irish consumers and it is never truer then when looking for life insurance or mortgage protection despite the heavy-handed attempts of the banks to corral their customers into taking all policies out with them from life insurance to home insurance.
Our private healthcare companies are not paragons of virtue either when it comes to delivering the best value life insurance policies for their customers. Here we take a look at some of the detail behind the regular ads on TV and radio extolling their advantages.
The VHI are tied solely to one life company (Zurich Life) so there is no trawling of the market by them to get the best quote from all the life insurance companies. Zurich are indeed a fine company but its never good being tied to one institution as it is no different to AIB (tied to Irish Life) or Bank of Ireland (tied to New Ireland).
VHI could be apt vis a vis pricing as in ‘Very High Indeed’ Life Insurance as their quotes (even after the VHI member discount – if you are fortunate to have private healthcare cover with them) are very much at the higher end of the pricing charts.
€250,000 level term life insurance for a 35 year old non- smoker over 30 years with no conversion.*
*all quotes as of 01.06.21
The overalls savings are chunky as in this example if the customer did come too ourselves then over the 30 year term of their policy – they would save €2,012.40.
On the mortgage protection side the situation is similar again with a couple of other factors that one needs to be very mindful of.
€250,000 mortgage protection insurance for a 35 year old non- smoking couple over 25 years on a Dual Life basis.*
*All quotes as of 01.06.21
Here VHI are the most expensive plus if you go for Dual Life (which every couple should as essentially you are getting cover for both of you individually versus joint life where it is only cover on one life as it finishes on the first death) you pay a little extra whereas with Royal London it costs nothing more plus you get the first month’s cover FREE.
Sadly, there is no free one month’s cover with the VHI’s mortgage protection offering although having Zurich’s Waiver of Premium benefit is of some consolation. This benefit ensures that your policy premiums are paid in the event of you being unable to work due to illness or injury.
As for the banks they aren’t even at the races as they do not even offer dual mortgage protection. There are other factors that also make VHI unattractive as the max term you can get life insurance for is 40 years so if a 35 year old couple want to try and get life insurance for as long as they can – they are limited to 35 years i.e. up to age 70. With Royal London the maximum term is 51 years and with Aviva it is 50 years.
What about the other private healthcare play who is also dipping their toe into the life insurance market namely
To use another horse racing analogy – Laya are also running in the mid-division when it comes to their protection products. They make a song and dance about the ability to complete and get actual cover online and in fairness this is a unique offering in the Irish market. However, over 97% of all applications in Ireland do get underwritten with no loading (where price of premium increases to reflect underwriters view that applicant is not as healthy as they would like) so the immediate cover is not as earth shattering as it seems. Moreover, there are many brokers allowing customers to complete and sign applications very quickly online (Low introduced it back in 2019) and at a far lower cost. The onus to go with Laya should not be a big one bar you are in a massive hurry and are happy to pay the price for that immediacy. In saying that players like us can get mortgage protection or life cover for individuals in 24 hours if required although it is not recommended to leave it that late!
We have alluded to price a number of times with regard to Laya so below is an indication of where they rank on the life insurance side.
€250,000 level term life insurance for a 35 year old non- smoker over 30 years with no conversion.* *All quotes as of 01.06.21
They are certainly not the most competitive and the above price includes a Laya member discount. But pricing is only one aspect as there are other factors that consumers should be mindful of if they go down the Laya road for their cover…
They do not offer a conversion or an indexation option. The former is particularly important as it allows the policyholder to take out further cover without any medical underwriting during the term of their policy. As most people’s health deteriorates as they get older it’s a valuable option to have but alas not available to Laya policyholders.
You cannot add serious illness cover as Laya offer nothing in this area. Serious illness cover is a very useful add on if you can afford it as it can be expensive. Many people like to have it as naturally the odds of becoming seriously ill are a lot lower than passing away so this cover gives you financial protection in such an event.
Laya’s cover is inflexible in that you cannot amend it in any way so they have no such thing as a Guaranteed Insurability Option. Royal London, Zurich, New Ireland all offer this and it allows you to increase your cover with no medical underwriting.
All of the above also hold true on the mortgage protection side with the significant additional obstacle for couples of not being able to get Dual Life Cover at all as it is not offered by Laya
€250,000 mortgage protection insurance for a 35 year old non- smoking couple over 25 years on a Dual Life basis.*
*All quotes as of 01.06.21 **This is join life.
In summary, Laya’s strengths are in their online platform and the immediacy of their underwriting process but these are undermined by having a product that lacks many of the attractive options that are freely available with other life companies. Furthermore, the overall life industry is making rapid strides in terms of flexibility and efficiency so consumers can get a better level of cover just as easily and far more cheaply by going with a good broker.
