Good life insurance is essential to guarantee serenity and economic security to the policyholder family members if the latter’s life is affected by a certain event provided for in the contract. It can be stipulated through an insurance company or a Bancassurance.
1. Life insurance: what it is
The ‘ life insurance is a contract between the policyholder and the insurance company, through which, following the payment of an annual premium, is guaranteed to the beneficiary a capital or a cash refund, if the insured is on in situations of financial difficulty, premature death, serious illness ( serious illness insurance) or disability. Good life insurance is essential to ensure serenity and economic security for the policyholder family members.
The policy can be stipulated in one’s own life or on that of a third party. The premium is usually paid monthly, although you can opt for a semi-annual or annual payment. The cost of life insurance varies according to numerous factors: from the rates charged by each company to the type of coverage chosen or according to the risk that the insured event (death, disability, etc.) occurs. With pure risk insurance, a particular life insurance policy contract, you can cover the life risk and permanent disability risk.
Before signing the contract, the insurance company delivers to the potential customer a questionnaire to be filled in, in which all the information useful to calculate the risk must be entered: habitual professional of the insured, lifestyle habits (if, for example, he is a smoker or if you practice extreme sports), information on your medical records (including any presence in the family of hereditary diseases).
The policyholder of a life insurance policy must promptly communicate any change of profession and any other change in their lifestyle or health conditions so that their company can recalculate the risk and, therefore, the amount of the premium. False or incomplete declarations can affect the right to compensation.
To facilitate the underwriting of life insurance policies, tax incentives are provided, consisting of deductions on the tax return.
2. Life insurance: the coverage provided
The types of life insurance differ according to the type of coverage: life, death, or disability. The most common are the following:
- Life insurance
It is the most common life insurance policy. In the event of the insured’s premature death, the beneficiary family members obtain a pre-established cash capital from the insurance company or an annuity (depending on the terms of the contract).
- Life insurance
The life insurance policy is a savings tool to guarantee a peaceful old age: it consists of investing in an accumulation plan to consolidate savings and dispose of them for the pre-established maturity.
- Mixed life policies
Mixed life policies are the most complete in absolute as they protect against both types of events guaranteed by life and death policies, therefore both the premature death of the insured and the case of great longevity. But that’s not all: they can also cover other types of events, such as disability, job loss, injury, or illness.
- Home mortgage insurance
It is a very important policy that guarantees the loan balance in the event of the contracting party’s death or other events such as loss of work or disability.
- Unit linked and index-linked life policies.
They are mixed insurance-financial instruments: through this type of policy, the policyholder invests in funds for a duration equal to his lifetime.
3. Life insurance: to whom it is recommended
Life insurance is particularly recommended (indeed, we would dare to say that it is fundamental) to those who are the main or even the only source of income for their family to guarantee a peaceful future and economic support for their loved ones even in case of extreme events.
Life insurance is very important if you have exposed your family to a substantial debt, such as a mortgage, an investment, or a loan, because, in this case, it is possible to obtain the sum useful to repay the debt even in the event of a serious unforeseen.
Also check out Family Life Insurance. Family life insurance, as the name implies, provides coverage for the couple, of all types. In this case, the children will be even more protected, since they know that, in case something happens to one of their parents, they will have the necessary resources to avoid difficulties. The possible coverage of family insurance varies according to the needs of the contractor.
4. How much does life insurance cost
The cost of life insurance depends on many factors, such as health conditions, lifestyle, and policy duration. The main elements affecting the insurance premium are as follows:
- Selected covers
- Insured amount
- Age of the contractor
- Lifestyle
- Health condition of the policyholder
5. Tax deduction for life insurance
Life insurance allows you to benefit from the tax deduction of up to 19% of the amounts paid and up to a maximum of 530 euros.
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6. Life insurance as a pledge
Life insurance can be pledged to apply for a loan, such as a mortgage to buy a house. Often it is the banks that require the taking out of a life policy as a guarantee before disbursing the loan. In this case, we are talking about life insurance on the mortgage, and it allows you to protect the mortgage from unforeseen events such as loss of employment, death, or disability.