Life insurance is one of the most contracted products in our country, and we all like to be able to protect our loved ones against any unexpected event that may occur.
Did you know that there are many types of life insurance? When taking out a life insurance policy, it is very important to understand how it will protect you.
As we know that this is a complex matter, PIB Group Iberia has prepared this article in which we are going to explain how many types of life insurance there are in the market and which is the best one according to your specific needs, from the classic life-risk insurance to life savings insurance.
If you are looking for life insurance policies… Keep an eye on this reading!
Life insurance: definition
To begin with, it is essential to remember the definition of life insurance. This type of products are those that cover you in the event of death and, in some cases, disability.
This means that if something unforeseen happens, the premium payment is intended to cover the risk of death. Hence, one of the most popular types of life insurance policies is known as life-risk insurance.
By the way! If you are wondering which are the most valued companies when it comes to taking out a life insurance policy, you can take a look at our comparison of the best life insurance policies in Spain.
What types of life insurance are there?
We have already told you: there are several types of life insurance. In fact, in our brokerage we offer you multiple life insurance options from different companies.
Now, what are the most popular types of life insurance?
In a general classification, we can distinguish, on the one hand, the different types of life-risk insurance and, on the other hand, the three types of life-savings insurance.
Let us explain them in more detail:
Types of life-risk insurance
We have already mentioned that the classic life insurance is the life-risk insurance, which covers the insured against two perils: death and disability.
As the name suggests, the premiums paid are not the object of savings, but are intended only to cover expenses in the event of the insured’s death, although other optional guarantees that the contracting party may decide may also be covered.
Depending on the conditions of the contract and the term, these types of insurance may be divided into:
1. Temporary or annual-renewable insurance
This is the most basic type of risk life insurance and its main characteristic is that it has an established term, i.e., it only lasts for a specific period of time, for example, 30 years. If the insured dies during this period, the beneficiaries will receive the money invested in the insurance. Otherwise, the sum cannot be recovered.
Temporary insurances are usually renewable contracts, intended to cover a possible premature death. They are the most common when there are mortgage obligations.
Whole life insurance
One of the most popular life insurance policies is whole life insurance, which provides the insured withpermanent coverage until his or her death. Since it does not have an expiration date, its annual cost is somewhat higher.
Depending on the coverages chosen, we can differentiate life-risk insurance into the following categories:
3. Death insurance
In a life-risk insurance with death coverage only, the indemnity would be collected by the heirs or the persons designated by the contracting party in the event of his death.
4. Life insurance with coverage for death plus absolute disability.
In this type of insurance, the insured will receive an indemnity in the event that before his death he suffers an illness or accident that forces him to stop working or, in other words, that justifies his absolute disability.
5. Life insurance with death and occupational disability coverage.
When a life insurance policy also includes professional disability, it goes a step further in protection. In this case, the insured will receive the insurance if, due to his state of health, he is forced to stop working in his usual profession, even if he is able to perform other occupations.
For example, a physician who is no longer able to practice medicine, but can begin teaching, will be eligible for indemnity if he/she has contracted this modality.
If you still have doubts about this issue, you can read more about it in our post about life and disability insurance. It is very important to understand this difference.
Types of life savings insurance
On the other hand, there is life savings insurance. This is a mixed type of life insurance, since it combines a (very small) risk life insurance with some of the typical features of a savings plan.
In these cases, the policyholder, the insured and the beneficiary of the insurance are the same person.
Savings and investment insurance offers liquidity, so if the death of the insured occurs while this policy is still in force, an additional amount will be charged.
Among the most popular types of life savings insurance are:
Individual Systematic Savings Plan (PIAS)
In 2007, some types of life insurance emerged in Spain called PIAS savings plans. This mixed insurance stands out for also building an annuity for the contracting party.
How? Thanks to the important tax advantages offered by its redemption, once the first 5 years have elapsed since its contracting. After that decade, the interest generated will be totally tax free.
Individual Long-Term Savings Insurance (SIALP)
SIALP savings plans were created in 2015. This form of savings also stands out for its favorable taxation.
As of the fifth year, its redemption is exempt from IRPF taxation, provided that it is redeemed all at once.
Annuity life insurance
The annuity insurance allows its holder to receive a periodic income until the time of death, in exchange for an initial contribution. This product stands out especially for its tax advantages, and is used above all to be able to count on a certain amount of money after retirement.
Taking out life insurance: Which is the best type for me?
As you can see, there are different types of life insurance policies. Choosing the most suitable insurance for you will depend on your situation and your needs at any given time.
And remember: this product not only protects your loved ones in the event of death or disability, but can also help you with your long-term financial and savings plans.
As your trusted brokerage, at Móne Seguros we can show you the differences between the different types of insurance. In addition, we guarantee you the most advantageous conditions to choose from among multiple companies and, above all, we advise you to offer you customized protection.
If you trust our team, you won’t have to pay unnecessary extras, nor will you be surprised later on about a coverage you thought your insurance included, even though it really didn’t.
Contact our team and hire us now as your life insurance comparator. We will help you calculate what this protection can cost you, without any obligation, we are waiting for you!
