Beyond all the tangential issues surrounding our lives, enjoying our family and close people always ends up being the most important thing. Protecting them will also be essential, especially if we have children or dependents who depend on our care and sources of income.
For this reason, and although sometimes it is not entirely pleasant to think about unpleasant future scenarios, it is convenient to consider what could happen if we ever miss them. The function of a life policy is to make these assumptions more bearable and, although it is not mandatory to have it, it will be essential if we want to enjoy ours with peace of mind.
And it is that this type of insurance has the main objective of protecting our family or loved ones if a misfortune happens to us. The idea is that the insurer pays the beneficiaries a specific sum that, to a certain extent and at least from an economic point of view, compensates for the loss and all the situations that may arise from the client’s death.
Preliminary considerations about life insurance
However, and beyond these general features, it is convenient to know some details and exactly how insurance of this type works and what coverages and policies are best suited to our situation and personal characteristics. A point at which both our needs and income come into play and the number of beneficiaries we wish to cover, among many other issues.
Before exposing the different types of supplemental life insurance that we can opt for, it is necessary to review what we are talking about when we refer to this product. It is a personal policy that offers coverage on the risk of death of the insured, as we have explained, and whose objective is to guarantee that the client’s beneficiaries receive financial compensation in said situation.
About the parties involved in this insurance, we have, on the one hand, the insured – who is the one who acquires the coverage – and, on the other, the policyholder – who is the one who subscribes and pays for it. Finally, we have the beneficiary, who receives compensation when the circumstances contemplated in the contract are met for it to become effective.
What types of life insurance are there?
As has been explained, there are different types of life policies containing various options and other peculiarities that make them be adapted according to the client who will hire them. These are their main characteristics.
term life insurance
In this case, the client can sign up for the policy for a specific period. It is not a permanent period but rather a particular period that can range from a few days to several years or until the client reaches a certain age. These periods are aimed at covering specific needs such as, for example, going on a trip or protecting the development of a risky activity or profession that will end after a few years.
As is evident, if the insured does not suffer any mishap during the agreed period, the insurer will not pay any compensation. In any case, it is an excellent policy for young people since it is usually cheap for this public and very burdensome for older people. Likewise, we must comment that this type of insurance has different premiums that the insured must pay.
- Increasing or renewable premium: this is a payment modified annually depending on the age that the insured person reaches. The older the insured, the more he will pay for the service, about his higher mortality rate.
- Level or constant premium: in this case, the policyholder will pay more than what corresponds to him for his age the first years in a compensatory way, that is, to pay less than what he would touch in the future.
- Decreasing premium: for, for example, bank loans. The beneficiary will be the bank itself, and the insurer will pay the pending payment.
whole life insurance
The main nuance of this type of policy is that the insurer would pay the compensation to the beneficiaries without considering the time of death. In addition, they cover for life, and their purpose is to provide the family or beneficiaries with amounts that compensate for the loss of income.
As for the premiums that can be chosen in this type by the insured, they are the following:
- Lifetime premium: whose payment is made until the moment of death.
- Temporary compensation: the cost is executed during a specific period, such as, for example, twenty or thirty years. However, insurance coverage would be available until death occurs.
Savings insurance or for cases of survival or retirement
They aim to provide the client with a specific monetary amount at the end of the period agreed in the contract. Its basis is an investment in the medium or long term, and it is conceived as a kind of complement to retirement or in the event of possible disbursements made in the future.
It is one of the least known types of life insurance, but its usefulness is not negligible. It is a kind of hybrid insurance that has risk insurance and savings insurance within the same contract.
In this way, the client will be covered in the event of his death, but, at the same time, he will be able to benefit from the agreed benefits if he survives the age stipulated in the contract. It should be noted that if the first of these options occurs (you die), the beneficiaries will be the ones who benefit from the compensation.
In annuity insurance, the insured person will have guaranteed traditional and life annuity when they pay a single amount or a premium during a specific period. For this first (life annuity), the payment is of a particular amount and is disbursed when the policy comes to an end and while the insured is alive. The amount can be fixed or variable.
For its part, temporary income provides a fixed payment for a certain period. With the Acierto.com comparator, you can find the cheapest policy that best suits your needs in a personalized way and less than three minutes.
Risk Life Insurance
Life Risk insurance can be defined as a policy for protection against the insured’s death of the beneficiaries he chooses. The form of the premium can be annual, and calculating it is based on three main factors: age of the insured, medical history, and the capital to be covered.
This insurance operates based on the fact that if the insured dies, the beneficiary will obtain the capital set out in the contract. Its objective is to protect the beneficiary if the insured is absent. The policy is canceled if it comes to an end before death can occur.