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21 things about life insurance you need to know

August 30, 2020
life insurance

What are life insurances?

We all know it and know cases: life changes you from one day to the next, from one moment to another. Unfortunately. If your children, your partner, your parents or anyone who depends on you is not guaranteed financial independence, you should ensure their future. Because no one is safe from an accident. In this article, we will help you with your questions about life insurance.

Life insurance allows you to protect your dependents if something happens to you and you cannot help them. Your insurance will take care of you that they lack nothing.

The people you love the most will be able to receive compensation for the insured capital, once or also in the form of income, so that your children have their studies guaranteed , for example, or so that your family can pay the mortgage, or so your partner can continue to pay the bills for the car or the rent of his business …

Compare prices and coverage in the main insurers. Let yourself be advised by an insurance brokerage that analyzes your case, your needs, and those of yours. Because life insurance is cheap and ensuring the future of your loved ones is priceless.

What does life insurance cover?

Basically if you die or become totally disabled , but it can be expanded to more coverage.

If you are going to get life insurance, you should tell your insurance broker what your hobbies are, because some insurances exclude death during risky sports. So if you are passionate about bungee jumping , you should ask to have that covered too.

Your insurance company will not take charge if your heirs decide to get you out of the way to collect: let them know. And he will not want to know anything in the event that you die from traveling to a country at war. Nor can you commit suicide during the first year of having life insurance (we advise you never to do so).

As for disability, generally, life insurance only covers it if it is total, but you can choose a more comprehensive policy.

Read the conditions of your life insurance to know what is excluded. Life insurance is very cheap and, of course, it has limitations. But if you want, you can cover additional risks at a higher cost.

Who should be the beneficiary of life insurance?

When life insurance policies are made by a bank, it usually puts itself as the beneficiary. That is, you die and the insurance company pays the compensation to the bank instead of your family. With this, the outstanding capital of the mortgage is settled.

Depending on what community you live in and what inheritance taxes you are required to pay, it may be advantageous for your bank to receive the amount to pay the mortgage.

But wouldn’t it be better if you insured your life for an amount greater than the money you owe from the mortgage so that yours could face other expenses and get ahead if you fail?

When you are paying a mortgage you never know exactly what you owe , the interest, the outstanding principal and a lot of concepts make you mess up and never have it clear. That is why you should not leave things that only they understand exclusively in the hands of your bank.

It is logical that the bank charges, but so does your family. Paying the mortgage is usually not enough when a family member passes away. It is necessary to expand the coverage .

family

For how much money to do the insurance?

To take out life insurance they will ask you what capital you want to insure; That is, how much do you want the insurance company to pay your heirs if something happens to you. Logically, the more you need, the more you are going to pay for your insurance.

How to calculate it?

Include a capital that is at least five times your gross annual salary . That is, if you earn € 24,000 a year, ensure a capital of € 120,000.

If you have a mortgage, add the amount of what you have left to pay , so that your heirs can pay the bank fees.

If you have debts for personal loans or car bills …, add them to the insured capital.

Also think about the particular situation of yours. Are your children small or do they already earn a living? Does your partner have her own resources or does she need your financial contribution? Are there dependent relatives? …

Add all this up and calculate the capital that you must insure to protect the people you love.

What is a health questionnaire? What about the medical review?

To get life insurance, the company will ask about your health. It is logical, you want your customers not to die!

You will have to answer a short medical questionnaire with questions about your health and lifestyle. Our advice is that you never lie , because if you die from an ailment that you had not previously declared, your insurance may not take over.

This questionnaire is very simple if you are under 45 years old and if the insured capital is less than € 300,000. Check with your insurance broker, because not all companies have the same requirements . In some cases, due to advanced age or because you want to hire a very high capital, the insurer may ask you to have a medical check-up at a center arranged with the company. Great. This way you will know if you are well and what you should do to take care of yourself.

Keep in mind that the company will have to make a large outlay if something happens to you, so that it will control that you have not tried to deceive it.

Can I have more than one life insurance?

Yes, you can have as many as you want and can pay .

If something happens to you, your family will collect compensation for all the insurance you have in force at that time.

In the event that you already have mortgage insurance with your bank, keep in mind that it will only cover the debt of the house. In all probability that will not be enough for your family. Widowhood and orphan pensions, if any, are usually not enough to maintain the desired economic level.

You are interested in taking out additional insurance to cover other debts, ensure your children’s studies or compensate for the lack of your income.

In general, you should have at least 300 € 000 insured so that the family can get ahead if one dies.

When does the life insurance end?

It generally ends at 70 or 75 years , and can only be hired until age 65. Companies know that we have an expiration date, so it would be absurd to insure as if we were eternal.

When the policyholder reaches that age, the insurance is automatically canceled … and so glad you didn’t need it, right?

Life insurance policies are paid annually and the amounts that companies charge increase by different percentages according to age groups. Up to 50 years, the increases are small, from 50 to 55 they go up, then more … It is normal, because our chances of dying also increase.

When taking out life insurance, we can choose if we want the insured capital to revalue each year according to the CPI or with a certain percentage, or if we prefer that it always be maintained for the same amount. This will also influence the receipt to be paid.

An insurance broker will be able to advise us on the offers of the different most advantageous companies for our personal situati If I am the beneficiary, how do I collect the life insurance?

If I am the beneficiary, how do I pick up for life insurance?

There can be two cases: that the beneficiary is the insured himself, due to a disability situation, or that they are his heirs because he has died.

The first will be to notify the insurance company of the disability or death .

If the only insurance the insured had was the one contracted with the bank for the mortgage, it is most likely that the bank is the beneficiary. It will be necessary to contact the entity to manage the cancellation of the debt.

The beneficiaries of the insurance must carry out the procedures required by the insurer, such as submitting the opinion of disability of the Social Security or the mutual insurance company, if applicable, or the death certificate, the medical report, reports of the judicial authority in the In case the death has occurred by accident, provide the will or the certificate of the register of last wills, etc., etc.

It is best to contact the insurance company as soon as possible and indicate the necessary requirements to make the deposit in the account of the beneficiarie Is life insurance the same as death insurance?

No. They are different, and you may need both.

A life insurance protects you in case of disability and protects yours if you die. A funeral insurance pays you burial expenses which, in case you don’t know, are quite high.

To avoid adding annoyance to your family if you die, it would be nice if you had a funeral insurance, which you can pay annually, in installments, or in a single payment. With this you make sure that your expenses are paid by you, without being burdensome for anyone .

Hiring a funeral insurance is a gesture of education, civility and consideration that we should all do. But, beware, sometimes there are those who have a magnificent funeral, but then leave their family to two candles.

Life insurance is the most important thing

How to know if a deceased relative had life insurance?

You will have to do some paperwork, and quickly!

In the Registry of the General Directorate of Insurance and Pension Funds, they inform you of all the life insurance of the deceased person, because sometimes the beneficiary does not know that they have insurance that they have been given for taking bank cards or opening accounts. All insurance is reflected in this body under the Ministry of Economy.

In addition, you must download form 790-006 from the website of the Ministry of Justice in order to request a certificate of insurance contracts with death coverage. You must provide the documentation they request, such as the death certificate and the register of last wills, pay fees and present it within 15 days from the date of death .

Within a maximum period of 7 days, they will also be able to inform you of the insurance contracts that the deceased had and with which companies.

You can then go to the insurer and request compensation if you are the beneficiary.

Is life insurance only served if I die? What if my partner dies?

Life insurance covers only one person , the policyholder. If he dies, his heirs receive the money.

If two members of the family provide the necessary income and the family finances would not be sustained if one of them were missing, it is necessary to have two life insurance .

When two members of the family contribute to the maintenance of the home.

In the case, still frequent in Spain, that the woman is a housewife, she too should have life insurance. Because her domestic work, even if it is unpaid, is very valuable. Who would take care of the children and the home if she dies? You would have to pay a lot of money for someone to replace her.

Life insurance is not expensive, and you can do as many as you consider appropriate to be able to live in peace.

Mortgage-linked life insurance usually only covers the capital pending return to the bank. Not the peace of mind of your family. The advantage of an insurance company is that the policyholder chooses what he wants to insure and what will be the amount that his heirs will be able to receive if he dies.

In some companies there is also a form of life insurance “two spouses” that compensates with double or quadruple if both members of the couple die. It is a good idea to protect minor children. You have to compare and make the best decisions at each stage of life.

Is it obligatory to get life insurance with the mortgage?

No. No law requires you .

The law tells you that to drive a vehicle you must have a liability insurance, because you can cause harm to others, a pedestrian, another driver … On the other hand, when you ask for a loan, no law requires you to insure your life.

However it is silly not to .

What would happen if you die? The mortgage debt will pass to your heirs, be it your children, your partner, your parents, a sister … Are they in a position to pay for your house or are you going to ruin their life?

Unless you are alone on planet Earth and it does not matter if you die. Because no one is going to inherit your property or your debts, it is convenient that you take out life insurance.

Note that the bank does not want your house , it wants you to return the money it has lent you, as is logical. Your business is not having thousands of houses, it is having billions. So he will probably ask you to buy life insurance before he lends you the money you need.

This is the only way to ensure that, even if you die, he will get back what he has lent you.

Is life insurance more expensive at a bank or an insurance company?

In a bank . Without a doubt.

A comparative study of life risk insurance premiums, carried out by INESE, the data and information company of the insurance sector, and the Global Actuarial consultancy, has revealed that it is possible to save between 30% and 45% on average if you buy the insurance from an insurance company instead of from your bank. In some cases, the report detects up to 42% less price in insurers compared to banks.

It is logical. Your bank is not an insurance company, and the interest rates are really low. It has to be funded in some way… but you may not want it to do so at your expense.

If you choose to save money yourself, instead of having your bank save it, it will be better that you take out your life insurance in an insurance company .

An insurance broker will be able to offer you the best prices from each company according to your needs.

How do I have to get insured by my bank?

It is not mandatory .

The law protects you if you do not want to take out life insurance with your bank and prefer to do it with any insurance company. The bank can set its conditions, such as telling you that it will penalize you with a higher interest if you do not make insurance with them. It is your right: whoever pays is the boss. But check it out, sure that everything is cheaper for you to make your insurance in an insurance company.

With interest rates on the floor and the returns that many banks face due to their bad practices, the best way for banks to get money is to sell you insurance. And, you may have noticed by now, banks are crazy to sell insurance .

There are abusive practices, such as charging you the premium at once included in the money they lend you for the mortgage, or requiring you to be with them for the entire term of the loan. Be attentive, because in banks there are ethical people, but there are also people who are not, as everywhere.

What is clear is that, on average, your insurance with the bank is going to be 40% more expensive than in an insurance company. You will see if it is convenient for you to accept it, stand up or change your entity.

life insurance covered

The bank tells me that I no longer have to pay for life insurance, is it worth to become a new one?

Absolutely yes . Misfortunes don’t just happen to others.

You may not have to pay for life insurance for the same years that you have the mortgage. Sometimes the mortgage is for 25 years and your insurance with the bank covers 15 or 20 years, or whatever.

There are decreasing capital insurance, which implies that as you pay the mortgage. They reduce the price of the policy. Because the insured amount decreases, be careful, the covered risks also decrease. What if something happens to you, the insurance that you have been paying for so many years will no longer cover almost anything.

Do not be happy for having less expense . Lacking life insurance is irresponsible. No one is safe from having an accident, and then what would become of yours? Could your partner maintain the home without your help? Could your children continue studying? Are there older people who depend on you? Who will bear the expenses if you are not there?

Life insurance is cheap . For the price it costs you to go out to dinner a couple of times with your family. You can ensure the future of those you love the most for a year.

Can I change my insurance if I already have it with the bank?

Yes of course.

In fact, one can and should change life insurance from your bank to an insurance company or even from one insurance company to another if they offer you more benefits, better benefits, and cheaper prices.

In financial matters there is no reason to swear allegiance to anyone. The policyholder must look out for her interests and those of her family.

Better than going to a specific company is to ask for advice from an insurance brokerage that works with the main insurance companies. Or to consult an insurance comparator to see what is best for us and to find out about different offers.

To change life insurance with the bank to one company or from one company to another. You have to ask what requirements we need. But with time, because we must request it at least one month in advance of the annual expiration of the policy.

Generally, we will have to send a registered letter requesting cancellation with all our data and those of the policy, or present it in person.

If I accept the bank’s life insurance, can I unsubscribe?

Yes of course. As it happens when you buy something: you have the right to regret it .

Once the policy has been delivered to you, the law gives you 30 days to withdraw, without indicating the reasons and without any penalty.

Find out from the insurance company, not the bank, what the procedures are.

Generally, you will have to send a burofax saying that you accept the unilateral right of withdrawal that is included in article 83.a of Law 50/1980 of the Insurance Contract and say that you want the return of the premium charged.

Start the procedures immediately, and do not let yourself be coerced: demand that your rights be fulfilled.

If, after paying your bank for life insurance for a while, you want to switch to an insurance company , you can too. You will have to send them a letter a month before the expiration of the annual policy. Ask them what the procedures are, and don’t forget that you are within your rights. If you don’t know what bank insurances are, check this article.

What is single premium life insurance?

In two words: a chore , to put it mildly.

Some banks have forced their clients to pay for life insurance with the mortgage loan and have charged them all at once, at one time, when they signed the mortgage.

The client receives the loan money where the life insurance is already included, which usually has a high cost because it covers the entire term of the mortgage.

Life insurance must be paid annually, the opposite is a waste of money . Nobody knows what will happen to her life. We may need to sell our house before we finish paying for it, that we have to move … Why pay in advance for something that we will not need?

life insurances factors

If I have been charged for single premium insurance, can I request it to be returned?

Ask an insurance brokerage for advice to inform you if they could process the refund of the money charged for the unconsumed premium of your life insurance .

Some banks have committed abuses and bad practices. Many are paying for it and will have to return the money improperly charged, as in the floor clause . They may also be forced to pay back their clients what they have charged for unclear, fraudulent and abusive insurance.

Sometimes, when signing a mortgage, the bank has allowed itself to charge an extra amount for the life insurance that it has included in the total of the money borrowed, instead of passing on the payment annually.

This is outrageous because no one knows how long he will live, or if he will have the same circumstances today as tomorrow. Life insurance must be paid annually, and it is convenient that we review the conditions and coverage that we need. We are not the same at 30 as we are at 50, neither personally, nor family, nor work.

Never accept payment in a single premium. You may win the lottery and decide to pay off the mortgage. Why then have you paid for insurance in advance?

You could argue that it is very unlikely that it will touch you. Especially because you are one of those who do not gamble. But imagine that you need to sell your house. That your company sends you to another country, that you separate, that you are unemployed … You never know It will pass, do not accept it in any way .

My bank offers me a level premium insurance, is it better than a life insurance?

It is something else.

Banks are willing to sell insurance because that is what they make money off of. This is why insurance is sometimes masked by other products that seem advantageous, but are not at all.

Level premium insurance is life insurance linked to a savings product ; In other words, the bank offers us an amount of money at a certain point in our lives, money that we have been contributing, of course, along with life insurance.

The bank calculates what we would pay for our life insurance during the entire term of the mortgage. And divides it between the monthly payments that will have to pay, and we always pay the same throughout the same life insurance of the contract.

A 30 year old has much cheaper life insurance than a 60 year old, so why pay the same level premium throughout life?

Our advice is not to commit to something like this. You do not know how long your life will last. Or if you will have to sell your house before paying for it. If you will change your residence, your country … Theirs is that you pay based on your age and your needs. Which will change from one year to the next.

Savings products may be fine, but they are something else. Levelized premium insurance is a mixture of life insurance and a savings product. The logical thing is to have life insurance with an insurance company and. If you want a savings product, contract it with the bank, but not linked to your mortgage or your life insurance.

Is it necessary to get life insurance to get lone?

Not necessary, but convenient other.

It depends on the personal situation of each one. Imagine that you live with your parents and you ask for a loan to buy your car. If something happens to you, do you want them to continue paying for your vehicle for years?

It is the responsibility of each one to face his debts , and not only while we are alive. Leaving the brown to others, forcing our loved ones to assume our commitments, doom them to ruin or put them through difficult situations is clearly unfair.

No one is safe from an accident. Life insurance helps our loved ones not have to pay the consequences of our lack of foresight.

Frequently Asked Questions

If you need help with life insurances, then this is the best article for you. In this article, we provide you with very important information about life insurances.

That is one of the things that we explain on this article, so read it and we’ll be happy to help you!

Simple answer is now. Long answer, could be yes. There are a lot of things that we have to consider, so please have a look at this article to get more information.

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