In the business section of the Sunday Independent there is a regular feature which analyses various financial products. It then offers a 'Best' and 'Avoid' recommendation. Yesterdays paper included the following :
Life cover
Increasing cover of €800,000 over 35 years for a 30-year-old non-smoking chap.
Best: Irish Life €77.13 per month
Avoid: Caledonian €103.89
Saving: €321.12 per year
Contact irishlife.ie or local branch
This recommendation is way off the mark for two reasons :
1. The correct initial premium for Irish Life is €93.17 per month. The premium quoted above is for AVIVA.
2. The €77.13 is increased by 8% per annum. The €103.89 is increased by 5% per annum. If you elected for the cheaper initial premium, you would end up paying around €48,000 more over the term, than if you had chosen to pay the higher initial premium.
So, what appears as a 'Saving' initially will actually cost you dearly in the long run. Someone has not compared these products on a like-for-like basis and the outcome is a misleading recommendation.
Monday, April 12, 2010
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