Danica Life (Ireland) - What to do?

Danica Life are exiting the Irish market. It will cease trading as a life insurance company here on 31st December 2012.

The current book of business will be transferred on 31st October to the parent company in Denmark. The exception to this is their PRSA business which will have to be transferred to another PRSA provider here in Ireland.

It appears that online access to policyholders accounts, who stay with Danica, will not be available after the transfer to Denmark.

The original service Danica offered was on an ‘execution only’ basis but it is now recommending that policyholders seek financial advice before they make any decision on surrendering or transferring to another company before the transfer date.

If policyholders have to get financial advice they will have to pay for this either by fees or by entry/exit charges on the ‘new’ products that they will be investing in.

If policyholders were able to navigate the Danica products on an ‘execution only’ basis ( ie no advice) originally, then I don’t see why they can’t do so again if they are transferring to other products here. If policyholders are in the market for this type of service then they might consider the following.

The Personal Pensions, Executive Pensions, Pension Retirement Bond and PRSAs can be purchased on a ‘no advice’ basis via www.prsa.ie . There are no entry/exit charges, no policy fees and there is a single annual management charge of 1%pa.

As for the Investment Bond, well that’s a bit more tricky because of the tax implications of surrendering the Danica plan as you can’t offset the loss on a Danica fund against another fund. However, if the gain/loss is only marginal and the policyholder is adamant about surrendering the Danica fund then they might look at what’s available via www.InvestAndSave.ie or www.Bond.ie . Both of these sites offer low-cost execution only products.

The Danica Life exit announcement also refers to Mortgage Protection and Term Insurance products that they may have sold. Again, the policyholder can change provider if they wish and I’d be surprised if they couldn’t get a cheaper policy in the Irish market. Caveat : if policyholders are switching providers, make sure that you have the new policy in place (on cover) before cancelling the old one.


Declaration of Interest : The above execution only sites are operated by the author.

The Pensions Versus Savings Debate

The goalposts have been moved over the last few years in terms of the tax efficiency of pensions. Some reliefs have been reduced and  taxes have increased on the benefits that are being drawn down.

Tony Gilhawley of Technical Guidance Ltd., in partnership with Standard Life, have produced a technical paper on the issue titled 'To Pension or to Save...that's the question!', which is available here.

The answer? Well, it depends...

Whichever route you take, it may be worth your while investigating these Pensions or Savings products.

Both sites provide access to low-cost products on an 'execution only' service basis.

How your life insurance premium can increase by 1,384%

I’m currently dealing with a life insurance policy where the Life Company have carried out a ‘review’ of the premium and sum insured. They have decided that the premium needs to be increased by 1,384% if the persons insured want to maintain the level of life cover that’s on the policy, up to the next review date.

The policy was taken out 25 years ago and is what’s referred to as a Unit-Linked whole-of-life policy. The premiums on these policies are guaranteed for 10 years. They are then reviewed by the Life Company and they decide whether the premium, plus any cash value on the policy, is sufficient to maintain the level of cover until the next review date. After the 10 years, reviews are carried out every 5 years thereafter and annually after age 65.

The Life Company state that ..”unfortunately your policy has not been reviewed as scheduled.” My reading is that, they never reviewed it.