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Life insurances. Everything you need to know about life insurance

August 31, 2020
life insurance

At globalinsurances.net, we are going to help you learn everything you want to know related to life insurance.

We will try to solve the main questions you may have about life insurance

We are going to explain in a simple way all the important things that may be useful to you.

This is intended to be a guide and from it you can access all the necessary resources by following the corresponding links.

Having said all this, we begin.

Definition of life insurance

The life insurances are personal insurance contracts that cover the death of the insured in its simplest form. In the event of the death of the insured, the company pays the insured amount to the beneficiary of the policy.

Therefore, it is a contract that helps us protect our family and / or people who depend on us year after year.

It is a product that provides peace of mind and protection, having one is an act of love and responsibility that will protect your family even if you could no longer do it.

What is it?

The life insurance is a private contract that protects financially to a beneficiary, freely chosen, which will receive a capital in case of death.

It is a very simple product that benefits both companies and policyholders. While it is very simple, it is also very important that it is done correctly.

In this sense, the important thing is that the questionnaire or health form is carried out correctly.

Life insurance prices

The price of life insurance is the economic amount that is paid to the company to be protected with this type of contract, it is also called a premium.

The price paid for is calculated based on the capital to be insured and the age of the insured.

What is valued in the price is the risk or statistical probability of death of the insured. Companies measure it with a rate.

This rate increases with age, hence, equal to the insured capital, the price increases year by year.

What does life insurance cover?

In its simplest version, life insurance covers the death of the insured. Therefore, if the same occurs, the person designated as beneficiary will be the one who will obtain the capital insured in the policy.

Death coverage is the basic one in all life insurance and from it additional coverage can be added.

What is life insurance for?

It serves to guarantee economic stability in the family unit in the event that the insured’s income stops coming in from month to month as a result of his death.

It is therefore an element of family protection that allows to give peace of mind to the family even when you cannot do it yourself.

Find out more in this article what it is for.

Do you need life insurance?

How to know if I need life insurance is a question that anyone who could cause financial problems for their family should be asked in case their income stops coming in from month to month.

We have created an article on our blog in which we answer that question using the 2 most common cases in which life insurance is needed.

Types and classes of life insurance

Risk life insurance

The life insurance par excellence and the one usually contracted is life risk insurance .

This policy guarantees the insured that the beneficiaries will receive the contracted capital if any of the guarantees contracted in the policy were to occur, during a specified period, normally one year.

Whole life insurance

It is an exclusive modality. With some peculiarities that make it unique, it has lifetime coverage, therefore it is always charged and the same is always paid.

Life insurance savings

The savings or investment insurance is a survival insurance , that is, it is charged by the policyholder after a certain period of time, the purpose of this product is to obtain a return.

Figures of the contract

Individual life insurance is that contract in which only one person is insured, compared to groups that insure several people with some common affinity relationship in the same contract.

In this type of contract, there are basically 3 figures that serve to give meaning to the product. Policyholder, insured and beneficiary.

Policyholder of life insurance:

He is the person who owns the contract, who has the rights and obligations thereof. You can freely choose the beneficiary of the policy and change the conditions according to your needs.

Life insurance policyholder:

It is the person on whom the insurance falls, that is, on whom the insured event must occur, whether it is death or disability, for compensation and capital payment to occur.

Beneficiary of life insurance

It is the person who will receive the capital in the event of a claim, the beneficiary is chosen by the policyholder, in case of disability the beneficiary is usually the insured himself.

Now that you know what life insurance is and what it is for, it is likely that you may be interested in knowing the prices with the main companies.

Which is the best?

The best one will vary in each case, and will be the one that best suits the needs of the person who is going to hire you, depending on your personal circumstances, age, profession, and health status.

We show you how to choose the BEST life insurance. So you can know the key aspects that you must take into account before deciding on yours.

Features

In this case we are going to talk about the characteristics of the most common product, that of life risk .

The first thing we must know is that it is an element of protection for the family.

However, it is true that it is also commonly used to protect against financial debts such as personal loans or mortgages.

It is an annual renewable temporary contract , so that for the duration of the contract there is protection, and at the time it is finalized, the rights and obligations of the policyholder and the insurer end.

Life insurance modalities or contracts

There are different products that can cover the different situations or needs of each insured. The most common are risk life insurance and loan repayment insurance.

The 2 contracts are very similar since they ensure the same fact.

They differ in that in life insurance the insured freely chooses both the beneficiary and the capital to be insured and in the amortization, the insured capital is the loan and the beneficiary is usually the bank.

Insured capital

The capital of a policy is the amount that the company pays to the beneficiary, in the event of the loss. It is the amount that will be covered in the policy.

The capital must be chosen by the insured, depending on their needs

  1. The current situation and economic capacity.
  2. Family members who are in charge.
  3. The debts incurred. For example, if you have a mortgage.
  4. The risks that you want to cover. Different coverages can be contracted (death, absolute and permanent disability, professional disability, serious illnesses, double capital in the event of an accident, triple capital in the event of a traffic accident).
  5. If you want to guarantee the future education of your children, whatever happens.

It will depend on the age and the situation in which each one is choosing one capital or another.

Why get life insurance?

The reasons for hiring you can be varied.

However, the most common are 2:

  • To cover a debt, (for example the mortgage)
  • To leave an economic cushion for the family in case our income stops entering the house.

It may be good to stop and reflect for a few minutes on the future we want for our family.

When people have children, we have to assume and know that we are responsible for them.

Therefore, we must ensure as far as possible, to maintain the standard of living to which they are accustomed, even if we are no longer there.

How much is charged for life insurance?

The amount that will be charged for life insurance will depend on what the holder has contracted, however to know how much is charged for life insurance we have created an article in which we expand the information in this regard.

But what you should know is that there is no fixed amount, but it will depend on the contract that each one has.

Act of responsibility

Some of the reasons why it is necessary for you and especially for yours.

Reasons

THE FUTURE MAY BE UNPREDICTABLE

People cannot control what will happen in the future, but we can protect you from unexpected situations.

In general, fatalities do not usually tell us when they are going to happen, so it is always better to be cautious.

PROTECT AND GUARANTEE THE QUALITY OF LIFE OF YOUR FAMILY:

When you have it, if death occurs, the mental damage will not be lessened. That is inevitable.

But you will prevent an added economic impact from being added to these, and rarely analyzed, due to the income that is no longer received.

The quality of life of our loved ones will not be so affected in the economic sense.

CANCELLATION OF MORTGAGES:

If there is a mortgage debt, with the mortgage insurance, it will be canceled, so the decrease in income in the event of the loss will be offset by the decrease in the main expense for the family.

PROVIDE TIME

The collection of the benefit allows us time to adapt to the new situation and new needs.

SUCCESSION TAXES:

With the capital that is received in the event of a claim, it is possible to face the tax expenses that the administration obliges us to (inheritance and donation tax), and other related expenses.

COVER LOSS OF INCOME IN THE EVENT OF DISABILITY:

If you have permanent and absolute disability coverage , we will not only be protecting our family (with the main coverage for death),

The insured himself is also protected since the capital contracted in the policy is charged in the event that the insured is declared incapacitated for the exercise of any professional activity.

Family life insurance

Having one is an act of responsibility that protects the family unit from a possible loss of income in it.

When there is a loss in the family, there is not only emotional misfortune, but also a considerable loss of income.

This income that stops coming in from month to month usually causes an economic imbalance.

Therefore, family insurance should not be seen only as an expense, but as something more important, a shield that can allow economic stability and the purchasing power of your loved ones.

Protect my family and my baby

How can I protect my family? This is one of the questions that all of us who are parents ask ourselves.

Life insurance is one of the best options to protect your baby no matter what. It is available to everyone and is very easy to get.

It allows you to take care of yours and prevent them from having financial problems.

How to make life insurance

When hiring a life policy, it is convenient to be advised by a specialized professional, because although it is a relatively simple process, having an error or inaccurate statement can cause us to have a serious problem when collecting the claim.

Below are the basic aspects to consider when purchasing life insurance.

  • Be clear about the needs before hiring it.
  • Choose the right type of life insurance .
  • Choose an independent mediator to advise us on which life policy we should hire and with which company.

The steps we have to take will depend on the subscription process of each company, but they are usually similar:

  • Choice of product and company to hire.
  • Insurance application : a questionnaire must be completed with the information the company needs for an assessment of the risk to be insured. These are usually personal, profession and health data. Some companies are already using tele-subscription processes, which streamline the process.
  • Risk assessment by the insurance company : the company will analyze the data provided in the questionnaire, and with them will decide whether or not we are insurable, and will also propose contracting conditions. If necessary, the company can request additional medical reports or even a medical examination. It is very important that the insured declare all the data that may aggravate the risk, since the omission of any data may mean that the company does not pay in the event of a claim.
  • Policy issuance : once the risk has been analyzed by the company and accepted by the client, the company will issue the policy, in which all the conditions of the contract will be detailed. Once the insured receives the conditions, they have a period of 30 days to cancel it.

Risk life policies are generally temporary, annual, renewable, that is, they are automatically renewed, every year, until the termination period established in the conditions (age of insurance exit).

This does not prevent either of the 2 parties from canceling the renewal of the policy.

This notice must always be at least 30 days before the expiration date, as established by the insurance contract law.

Who to hire

The best option is to do it through a specialized brokerage , since they are the only ones that are professional and independent.

They have the obligation to meet certain requirements for the distribution of insurance, which are imposed by the General Directorate of Insurance and Pension Funds, which is a guarantee of quality for customers.

The independence of the companies allows insurance brokers to find the best option among the entire insurance market, which meets the specific needs of each client. In addition to this, and as a value added , the insurance brokerage will always help you in the event of a claim , and what is more important, it will position itself on the client’s side, not on the company, in case of conflict between the parties.

Taxes

The taxation of life insurance is a subject that gives to write a book. However, what you should know roughly is the following.

Life insurance taxation in 2020

The first thing is that you have to differentiate between risk products and savings products.

In the case of savings insurance, they will be taxed as income from movable capital. Therefore, all the legislation corresponding to savings and investment products will affect them.

Those at risk have a different taxation for death and disability coverage.

To pay death taxes which will be the beneficiary, who will have to pay tax on the inheritance tax and donacione s .

The compensation will become part of the patron’s patrimony and this tax will have to be settled. It is important to know that it varies considerably from one autonomous community to another.

In the case of disability, it is the insured himself who collects the benefit and does so as a return on movable capital, so he will be taxed in personal income tax at the rate established for savings and finances will take a good pinch of the compensation.

Does life insurance carry VAT?

As for VAT, it must be said that they are exempt, that is, life insurance does not pay this tax. They pay in other concepts such as the IPS insurance premium tax or the Consortium.

Frequently Asked Questions

In most countries it is, but not in all countries. You will need to research on your own country to see if it’s mandatory for you. However, it’s always highly recommended to have one.

It really depends on what type or life insurance you choose and what you consider expensive. We recommend you to look at your needs and search a good life insurance that meets for you, then look at the price.

As for VAT, it must be said that they are exempt, that is, life insurance does not pay this tax. They pay in other concepts such as the IPS insurance premium tax or the Consortium.

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