There are many reasons why life insurance is crucial for certain people, especially when they have family members to take care of. However, without forgetting the permanent disability coverage, which is essential, for the reasons we will now see.
Life insurance coverage
A life insurance is comprised of several guarantees:
Death
This is the basic coverage of this insurance, which is nothing more than an insured sum that would be paid to the beneficiaries chosen by the policyholder upon the death of the person insured under the policy.
These beneficiaries could be: spouse and children, usually; but we also find the bank, sometimes, for current mortgages. It is important to assess the Inheritance Tax so that the tax burden of the heir is reduced as much as possible; hence the need for good advice.
Let us remember that the S.S. would pay the widower 52% of the deceased’s regulatory base.
This is: for a salaried worker, approximately half of what he/she earns; for a self-employed person, much less in the vast majority of cases.
Permanent Disability
This guarantee is optional, although we advise its contracting, due to the high expenses that this situation causes on the person and his/her family members: car and housing adaptation, surgeries, specialists and rehabilitation, caregivers; in many cases reduction of income…
As much as Social Security can pay 100% of the regulatory base, it is impossible to reach everything, especially at the beginning, with the expenses that are generated.
But, let’s remember that there are several types of permanent disability:
- Absolute: the one that disqualifies you for any profession. This is the one that is usually contemplated in life insurance policies. It is usually taken out by people who do not perform manual labor, for which we will now comment.
- Total or Professional: this only disqualifies you for the profession you perform. Our advice is to subscribe is in professions with manual work: doctors, dentists, plumbers, mechanics, physiotherapists… These people live by their hands; if anything happens to them in one of them, they will not get the absolute disability, but they will probably get the total disability. With that money, they could redirect their career or, at least, compensate for the reduction in income, since Social Security pays only 55% of the Regulatory Base.
Additionally, there would be other optional guarantees such as “critical illness” (which is additional capital that would also be charged for), but this is not often underwritten.
Who should have life insurance?
In view of the coverages, we would like to remind you which persons are more susceptible to contracting this insurance:
Dependent children
The Social Security benefit will help, but third party assistance will be needed for the widower to continue working and generating income for the family, so supplementary assistance is needed.
Self-employed
Around 90% of the self-employed under 50 years of age contribute at the minimum rate. This means that the widow’s/widower’s pension was €394/month in 2015, instead of the income generated by this person. There is no profile more in need of this policy than them. Insurance for the self-employed is vital, both for life and sick leave.
People above the maximum S.S. contribution.
A partner/administrator, earning more than 4,000 € per month, implies that he/she does not earn that, but 3,606 €, so that the benefits offered by the S.S. are insufficient for his/her family and it is necessary to complement it. It goes without saying that people who earn more than €60,000 gross annual income.
Let us remember that partial disabilities can only be covered by accident insurance, never by life insurance. This issue will be dealt with in another post.
If you want a complete advice on this subject, to know your personal situation, the life insurance capital that for your personal and professional circumstances would be convenient, ask us. We have already explained that, after several studies, it has been shown that life insurance is cheaper in companies than in a bank.
At PIB Group Iberia e Inversión you will find the advice you are looking for and the best life insurance.
