Life insurance is a very useful tool that can be of great help to us, but do you really know what it is for? Surely you have ever wondered what would happen if an accident happened to you, fatal or not, and your debts were not yet paid. No one wants to leave their children a lot of bills to pay.
For this type of situation and others that are even more complicated, we can count on life insurance that guarantees that if you find yourself in a complicated situation, its coverage makes everything a little easier.
Life insurance is one whose main purpose is to protect the insured and their beneficiaries with financial support so that, in the event of a complicated situation, the income provided by this product helps to overcome it.
Without a doubt, its usefulness is very high, but we may not be very clear about what type of life insurance is best for us or what coverage each of them can have. Next we are going to analyze the price of life insurance and everything related to this type of product.
What is life insurance for?
Although the main purpose is to provide economic resources to relatives in the event of death, life insurance currently goes much further, since it usually guarantees that income in the event of total and permanent disability.
With the contracting of life insurance, we ensure that the beneficiaries have income in the event of the death of the policyholder, replacing the income that the policyholder provided and that are often necessary for the subsistence of a family.
Perhaps you are not in this case because you do not have a family and, therefore, in case of death you will not leave anyone in a situation of financial need. If your situation is this, you will depend solely on your income and an accident may occur that eliminates your chances of working, with absolute and permanent disability. In these cases, you can also guarantee an income by taking out it.
What does life insurance cover?
Now that we know what it is for, we are going to analyze in depth the possible coverage that we can guarantee with it:
- The main risk, in this case, is the death of the insured. Although it may seem that death from any cause is cover, in the conditions of many policies we can find exclusions for some situations, such as the practice of risky sports, in which the beneficiary would not be cover. In addition, in some cases, such as suicide, there is a waiting period. For all these reasons, it is very important to read the clauses of the insurance policy very well before contracting it.
- Additional risks, such as permanent disability or death due to special causes.
- Critical illness cover covers the risk of a critical illness. This risk is usually limit by age.
- Temporary or permanent disability, both personally and at work.
- Disability or death due to accident, consists of extra compensation in the event of disability or death in an accident, including a traffic accident.
As you can see, life insurance coverage includes a wide variety of risks that can occur in the course of our day to day. That is why they provide peace of mind and security for the insured and the beneficiaries, covering possible situations of need or precariousness that could arise as a result of death or disability.
There are different types of permanent life insurance:
- Traditional: protects the insured throughout life in exchange for the payment of a constant fee. If the policy ceases to be in force or the insured survives to a certain age, the insurer will reimburse the cash value of the policy.
- Modified Whole Life Insurance: this policy defines a variation in the value of the premium to be pay at a given time.
- Joint Whole Life Insurance: with this insurance, two spouses are protect and when one of them dies, the benefit is pay to the other and the policy ends.
- Universal Life Insurance: the main characteristic of this type of life insurance is that the insure can modify the insure values and the premiums to be pay, within certain limits, as well as whether or not the death benefit will be constant throughout the the years.
- Variable Life Insurance: the value is place in an investment account and said value will vary depending on its performance.