Michael McGrath (Cork South Central, Fianna Fail)
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30. To ask the Minister for Finance if he or the Central Bank has any plans to conduct a review into whole-of-life assurance policies, which have resulted in some enormous hikes in premiums payable by policyholders, in order to maintain benefits; and if he will make a statement on the matter. [17530/16]

Michael Noonan (Limerick City, Fine Gael)
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I have established a task force in my Department to undertake a Review of Policy in the Insurance Sector.  This Review is primarily intended to address issues in the non-life insurance sector in Ireland and so I would not anticipate that issues to do with the whole-of-life policies would be included.

The Central Bank of Ireland has informed me that it has no current plans to review the sale of unit linked whole-of-life products. However, it considers these products in its risk and evidence-based approach to prioritising its work.  This ensures that it is focussing its resources on those areas where it considers there to be a significant threat to its consumer protection objectives.  This includes carrying out a comprehensive annual consumer risk assessment, whereby it examines each of the retail sectors regulated by the Central Bank to identify current and emerging risks.

In general, whole-of-life policies are designed to provide consumers with life cover for their whole life. As long as the policyholder makes regular payments sufficient to maintain the chosen benefits, this type of cover will pay a lump sum on the death of the policy holder.

The regular payment into the plan covers the cost of providing the benefits chosen on the plan. In the early years the payments are higher than the cost of the policyholder's benefits. The extra money paid goes into the plan fund. Protection benefits get more expensive as policy holders get older; usually as the plan progresses the payments begin to equal the cost of the chosen benefits. In the later years of reviewable protection plans, the cost of the benefits increases significantly. In order to keep the level of benefits at the current level of payments, the difference is made up from the plan fund.

During its regular policy reviews, the insurance company assesses whether the consumer's current level of payment is sufficient to maintain the level of cover desired.