How to choose life insurance?
It is a question that more than one has ever asked. To choose a life policy, a series of factors must be taken into account that today is important for anyone who decides to take out one of these insurances. Here are some tips and tricks about how we can choose life insurance and that we have to take into account when requesting it.
What is the insurance of life?
A life policy is an insurance that covers the risk of death, survival, and disability. These insurances cover the existence, integrity, or health of the people.
The fundamental part of life policies is that they cover a stipulated premium to be able to receive in the event of death or disability an amount that makes up for the lack of insured income.
Who contracts life insurance?
A policy is normally taken out by people who were elderly and who, out of fear of losing everything, made an insurance policy. The truth is that nowadays, more and more young people between 25 and 40 years old are taking out a life policy, so they benefit from a series of advantages, including that they pay a lower amount. In advanced ages, it is more expensive because the risk that is insured increases.
Advantages of hiring a life policy if you are young
- First advantage: If you take out a life policy when you are young, the main advantage is that you will be able to save. The premiums are lower therefore the annual amount to be paid will be better.
- Second advantage: Tax advantages, which means that the contracted capital is not obliged to have tax deductions because of the inheritance.
- Third advantage: It is unattachable. If something happens to the owner, the contracted capital does not respond with the debts of the same.
What types of life insurance are there?
Mortgage insurance for the duration of the premium
- Annual premium mortgage insurance: It is the most common. The premium or installment is paid in advance each year and each year the cost is reviewed according to the outstanding capital and the age insured.
- Single premium mortgage life insurance: It is the one that is contracted when a mortgage is requested. The insurance is contracted by paying the premium in advance for a number of years that may or may not cover all the years of the loan.
Mortgage insurance for the insured capital
- Mortgage insurance of outstanding capital: It is the most frequent and the one that benefits the insured the most since the premium is reduced from year to year. In this case, the insurance is updated every year based on the outstanding debt with the bank.
- Total capital mortgage insurance: The amount of mortgage insurance does not vary, it is constant over time. This modality assumes that even if the outstanding capital decreases, the premium or quota is not reduced. In the event of death, the bank should only keep the outstanding part of the credit and the rest of the amount received by the insurance should go to the insured or his heirs.
How do we choose life insurance? What factors must be taken into account?
To know how to choose life insurance, you have to take into account certain factors to know which one is best for you:
- We have to choose insurance that has the coverage that suits us best. A policy that provides us with family security in situations where the possibility of having an income is lost or diminished.
- We must know the different contracting modalities before choosing a life policy.
- The sum insured for coverage must be equivalent to the basic expenses of a family for three or five years. This is supposed to be the time it would take for a family to regain economic stability after a death or disability.
- The beneficiaries must be taken into account. When contracting a life policy, it is possible to designate one or more beneficiaries. When you decide that it is more than one, you also have to determine how the money will be divided. It is also possible to designate a secondary beneficiary in the event that the primary beneficiary dies before the insured.
To determine how we choose a life policy we must take into account these four main factors that will help us with decision making.
How much does a life policy cost?
The price of our policy will depend on how we choose the insurance, that is, the type of insurance we choose. Depending on the type of coverage that we contract, the insurance will be more expensive or cheaper.
We also have to take into account the capital that we are going to insure, the higher it is, the higher the premium that we have to pay will be. Approximately, if the capital is € 100,000, annually the premium will be higher, between about 200 or 250 euros per year for the contracting of our life policy.
To make an approximate calculation of how much a life policy can cost us, you can consult our website and make an approximation of the cost that hiring this service may entail for the insured per year.
What does it mean to be a beneficiary in life insurance?
Once we know how to choose our insurance, there are a number of concepts that must be clear, including the concept of the beneficiary. The concept of beneficiary refers to the person or persons designated by the insured so that in the event of death they receive the payment of the contracted policy.
The beneficiaries can be designated by the insured expressly, when the insured designates them with names and surnames, or generically when the insured does not make the designation referring to specific people, but only indicates their relationship, for example, children, spouse, heirs, nephews, etc.
The designation of the life insurance beneficiary or beneficiaries can be changed at any time as long as the policy is in force. To carry it out, there are two processes:
- By written communication to the insurer or insurance mediator so that they change the person or persons designated to receive the premium.
- Expressly indicating it in the will.
In short, when asking ourselves how to choose a life policy we must take into account the factors that we have previously detailed, without forgetting that My Policy can help you calculate the price of your insurance and also advise you on which policy is the most adjusts to your needs and with which you will be most comfortable.