Royal London Ireland has announced that it will now offer a "financial cushion" for policyholders who donate a kidney, bone marrow or portion of a lung or liver to another family member.

The first-of-its-kind "organ donor cover" has been introduced as part of the insurance provider's Specified Serious Illness (SSI) cover.

Under the newly-revamped policy offering, Royal London will pay a €2,500 one-off lump sum to living donors.

In the wake of the news, concerns have been raised that it amounts to "cash for organs" and is unsavoury and unethical.

Mark Murphy, chief executive of the Irish Kidney Association, has said:

"We don't need insurance companies offering these things, we have a compensation scheme... It's not necessary, it's not needed. They shouldn't be doing it, on the basis that it's not needed."

Colette Houton, Royal London's underwriting and claims lead, commented:

"The supply of organ donations is an ongoing issue in this country, with an ever-increasing demand from those who are unfortunate enough to need organ transplantation.

"This shortage has led to more people receiving organs from living donors...

"It would be nice to think our pay-out could potentially help to offset the cost incurred as part of the admirable, altruistic acts that living donors are carrying out...

"Potential donors can face loss of earnings coupled with high medical bills and expenses and our goal is to alleviate these worries and concerns somewhat, by providing some financial aid to support them through surgery and recovery time.

"Living organ donation is an admirable, altruistic act and a lump sum can, at least, help to offset any costs the donor incurs following the operation and recovery involved."