When we take out a life insurance policy, we seek to guarantee that a capital sum is paid depending on the contingency or the guarantee that acts. We are talking about: death, disability, serious illness… Today we will explain who is the beneficiary of this money from the life insurance.
Guarantees covered by life insurance
As we have already commented on more than one occasion, and very briefly, this is covered by insurance (these are the guarantees that can be chosen, they are not always contemplated):
- Death from any cause (illness or accident)
- Permanent disability
- Absolute: which disqualifies to perform any type of profession.
- Total: it is more specific, since it only prevents us from working in our usual profession (it is frequent in doctors, plumbers…).
- Serious illness: less frequent, but growing, given the number of cases of cancer, stroke and heart attacks that exist around us
Who receives the indemnity in life insurance?
The advantage of a life insurance policy is that the company allows us total freedom when it comes to designating to whom we want the sum we have insured to go in case of death.
In this way, if we do not write anything specific, the policies are paid by default:
- In case of death: either to the legal heirs or to the spouse and children in equal shares.
- In case of disability or serious illness: the money goes to the insured himself
But, as we have said, the policyholder can expressly designate any beneficiary: children, boyfriend or girlfriend, specific friend, parents…
What if I have mortgage life insurance?
In most mortgages, the bank requires you to take out a life insurance policy. Yes, they can force us to take out the insurance, but not to contract it with them.
The problem with mortgage-linked insurance is that since we are tied to it, on the one hand, they do not care about offering competitive conditions in terms of price and coverage. That is why it is important to compare and see if it is in my interest to subscribe it with another provider.
The objective pursued by the financial entity with these insurances is that the debt that the client has with the bank is compensated if anything should happen to the borrower, see death. For this reason, they require to be listed as beneficiaries.
Let’s not lose sight of insurance taxation
The indemnities paid by the company, of course, have tax implications. Depending on the contingency that generates these payments, as well as who the beneficiary is, they are taxed in one way or another.
Logically, from a tax point of view, in case of death, it is more interesting for the children to receive it in case of death (due to the exemptions it has for the tax authorities).
In the case of disability, for example, if the policyholder, insured and beneficiary are the same person, it is taxed as Income from Capital Movable, in our Personal Income Tax.
If you want to find the best life insuranceat the best price, and also have the advice you need to take into account these important concepts: taxation, beneficiaries, tax deductibility, choosing the sum insured of the life insurance policy…… we are your Insurance Brokerage.
