Hiring a Life Insurance: What You Should Know

It is understood by life insurance or insurance on human life to the operation in which capital is associated with survival or death or both, of a person or group of people. It can also be associated with the physical, health or marital status of the person. Therefore, unlike non-life insurance, life insurance in the risk falls on the life of a person.

Life insurance integrates personal insurance in which the payment by the insured of the amount stipulated in the contract depends on the survival or death of the insured at any given time.

For this reason you should have a basic difference:

- Insured: person whose life depends on the payment.

- Employer: person signing life insurance and pays the premium. It may be the same person as the insured. 

- Beneficiary: person receiving the capital.

Life insurance can be divided into two types: life insurance in case (life savings insurance) or insurance in case of death (life risk insurance). Therefore, under the name of life insurance we can include insurance involved in the death of the insured or survival after a certain time.

Obviously, the risk in this type of insurance is variable because it depends largely on the age of the insured. So the risk in insurance to cover death is increasing as the insured's birthday and so the premiums paid end up being higher as age increases.

We will explain the different types of life insurance detail to avoid problems of understanding:

If life insurance or life insurance savings

Savings insurance can be classified as deferred capital insurance, annuities and savings insurance mixed, depending on when the premium is paid and when capital is received:

- Insurance deferred capital: capital to the deadline agreed in the contract only if the insured lives on that date come. If the insured dies before the date specified in the contract, two things can happen with premiums already paid, that is the left insurer itself or transferred to itself insurance beneficiary.

- Sure immediate annuity: in this type of insurance a single premium savings that guarantees payment of rent until the death of the insured is paid.

- Deferred income sure: once finished within deferral agreed in the contract, constant and regular income to the insured will be paid while he lives. This insurance is the most similar to what we know as pensions in Spain and you can hire to collect a monthly income from age 65.

- Mixed Savings insurance: be mixed deferred capital (paid if the insured survives and if died premiums paid by it is returned), universal life (if you have coverage for survival and death case) and Unit Linked, which we will talk in more detail in another article.

Life insurance corresponding to this category may be of the following types:

- Whole life insurance: payment of the amount stipulated occurs immediately after the death of the insured, whatever the date.

- Sure 2 or more people: These types of risk insurance insured persons are reciprocal beneficiaries and insurance peculiar lifetime.

- Temporary Insurance: payment occurs immediately after the death if it occurs before the end of the agreed period, i.e., if the insured survives the end of the period, the insurance will be canceled.

- Insurance Loan Repayment: When the insured dies, the insurer takes over the liquidity of the appropriations provided in the policy. This type of insurance is very common when you have to hire a mortgage and do not want to transfer the position of having to continue paying it to anyone in the family.

The values ​​guaranteed for life insurance are exercisable rights that can be carried out and that many people are unaware of its existence. This is the rescue, reduction and payment of life insurance.

Depending on many combinations, once you pass the first two years of life insurance, the policyholder is entitled to a reduction of the policy and once the first two annuities are paid also entitled to rescue and advance. We will explain these concepts:

- Rescue: the early termination of the policy to the policyholder will. Many people, in times of crisis or job loss are about your insurer to cancel your life insurance policy. In these cases, the insured will receive the guaranteed value on the contract from which a number of risk and costs are deducted, leaving finally canceled the policy.

- Reduction: This value appears on the life savings contracts or mixed long as it appears in the contract. It is neither more nor less than the suspension of payment of the insurance premium agreed. Thus, the insurance suffers a variation and benefits in the event of the occurrence of the insured loss will decrease proportionally to the premium reduction.

- Payment: the right to a certain amount of money from life insurance to the insurer. Basically, the maximum amount of deposit is the redemption value and once the insurer will be entitled to ask an interest with the remaining bonuses.

Additional guarantees in life insurance

Although the main coverage life insurance is usually the death if it is true that insurers usually offer a number of additional covers that are valid during the course of the insurance. Some of these additional guarantees are:

- Professional and permanent disability

- Absolute and permanent invalidity

- Death by accident or traffic accident

- Serious diseases

You see, we've talked about the basics of life insurance but in future articles we will discuss the taxation of life insurance and a number of important factors when an insurance of this kind.