- Life insurance can be contracted to cover the death of the policyholder or for him to obtain profitability for his money.
- There are 2 types of Life insurance: Life Savings and Life Risk.
Life insurance is the provider of protection against the death and disability of more than 30 million Spaniards. A third of them have it individually, and the rest as Collective insurance contracted by their company or for several members of the same family nucleus. It is an insurance product that is widely used for the help it represents for family members and relatives when the policyholder dies or becomes disabled, especially when they depend directly on their income or are linked to a loan of any kind.
When contracting a Life policy, just like to subscribe to any other insurance, it is important to have clear questions such as what is Life insurance, what types exist, what do they cover, who contracts it and where.
What is a insurance of life?
Life policies are part of the insurance denominated for people and consist of the payment of a previously stipulated premium to be able to receive in the event of death or disability an amount that replaces the insured’s lack of income.
The amount of the premium that the insured faces depends on the risk and the monetary amount that he wants to receive in case of disability or that his beneficiaries receive in the event of his death. In addition, that final compensation of the policy can be received in a single payment or as an income, as desired by the insured or their beneficiaries.
There are 2 main modalities within Life insurance, those that cover in case of death and those that do in case of life. In addition, the combination of both results in mixed insurance.
- Insurance in case of death, also called Life Risk Insurance.
- Life insurance, called Life Insurance Savings.
In addition, within them it is possible to choose to assume investment risks by varying the amount to be received from fluctuations in the financial markets or not to take risks and avail of a fixed return.
Types of Life insurance
The choice between Life Savings or Life Risk insurance will depend on the purpose the insured wishes for his policy. Thus, the first of them is hired to obtain a return on the premiums paid, while with the second the beneficiary receives the stipulated capital when the policyholder dies.
Risk Life Insurance
Life insurance in case of death It is the so-called Life Risk, and the function of its coverage is that the beneficiary of the policy receives the capital stipulated in it when the policyholder dies. Therefore, unlike other health insurance, in the case of Life Risk the policyholder and the beneficiary are not the same person.
This policy can be contracted at 2 modalities: whole or temporary life.
Whole life insurance
The whole way of life consists of payment of the capital designated in the policy just after the death of the insured, regardless of when it takes place. In addition, within it you can choose between life or temporary premiums. With the former, payment is made during the life of the insured, while with temporary premiums, payment is made for a number of agreed years or until her death if it arrives before the policy expires.
Term Life Insurance
These Life insurances cover the risk of death for a specific period of time and stipulated in the policy. This type is the one that is contracted for the amortization of loans. For example, the insured dies and had a mortgage pending, the insurance covers the outstanding amounts.
The obligation that the insurer acquires after signing comes to an end at the expiration of the contract and the company does not have to make any disbursement to the beneficiary if death does not occur during the term of the contract.
In this modality there is no possibility of redemption benefit, but they can be convertible or renewed annually with the payment of the premium to temporarily extend the insurance coverage.
Life Insurance Savings
Insurance Life Savings It is also called in case of life, and with its contracting, the beneficiary, who in this case is usually the policyholder, will receive the capital if he lives when the policy expiration date arrives. It consists of paying some premiums that give the insured profitability, an investment that although offers low interest compared to other savings products, presents a reduced risk. However, their tax advantage is that they are not taxed on the profitability obtained but only on the collection thereof.
These policies can be contracted as Unit Link, Insured Pension Plans (PPA) or Individual Systematic Savings Plans (PIAS) and are usually subscribed to complement retirement income, although this is not their only function.
Mixed Life Insurance
On the other hand, some insurance companies offer Mixed Life insurance, which guarantee the payment of a capital to the beneficiaries of the policy in the event of the death of the insured. They can also pay it to the policy holder in the event that the maturity of the insurance has come, the insured remains alive. Currently, most of the Life Savings insurance policies contracted are of this type, since they incorporate into the pure characteristics of a savings policy a capital due to death or disability.
Who takes out Life insurance?
There is a certain tendency to take out Life insurance when you are already an advanced age, although its importance and benefits do not only focus on that range, in fact taking it out when you are young has advantages. During 2005 more than half of the new contractors of these policies were between 25 and 44 years old, a trend that continued a few years later but that in 2013 became between the 35 and 44 years. The characteristic that prevails over time is that of people who have family members who are dependent on them and who, by hiring this insurance product, want to guarantee their well-being if something happens to them.
Protecting family members and the insured himself from what may happen to him are just some of the Reasons why it is convenient to take out Life insurance, but it is also done to cover the mortgage.
Life and mortgage insurance
When signing a mortgage, banks usually link it to contracting Life or Home insurance. That is why the first positions in the list of companies with which guarantees of this type are contracted are occupied by banks. However, although the subscription obligation is imposed by them, the user can decide whether to contract it with their bank or go to the insurer of their choice.
Life insurance with death coverage that is taken out when acquiring a loan of this type fulfills an economic mission. Specifically, according to Insurance Social Report, during 2013 the insurance settled 2.400 mortgagesAnd it is that many Spaniards hire him to respond to the payment of their mortgage and in this way not leave their relatives the weight of a mortgage to take over when they are absent.
Take out Life insurance
Choosing which Life insurance to contract can be a copious task, but the needs of each user will determine which is the best for each one. This policy can give you many benefits, especially the security that your loved ones will be protected in the event that something happens to you. When you go to hire it, take into account all the coverage and exclusions of the policy and be honest in the questionnaire that the insurer will carry out about your state of health so that it is correct and the insurer compensates you or your beneficiary in the event of a claim. If you want to hire the Life insurance that suits you, use the comparator of Rastreator.com and you will be able to see at a simple glance the coverage and the price offered by the main insurers.