The life insurance guarantees a financial amount in the event of death or, normally, disability. It works as follows: you pay small monthly, quarterly or annual premiums to the insurance company of your choice, which will then pay the amount you are insured for: 50,000, 100,000, 300,000 euros... in case something happens to you. So, what is life insurance for?, Who is the beneficiary of a life insurance policy?
If the cause of the indemnity is death, the money will go to the heirs or assigned persons, which we will have decided when we take out the insurance (and which can be changed at any time).
If the cause is disability, the insurance money will go to us. However, BEWARE when taking out a life insurance policy because usually only absolute disability is insured, whereas we recommend professional disability as well.
There come times in our lives when people here and there start recommending life insurance, especially if we are going to take out a mortgage or have children. So what is life insurance for is a question that we answer very often in our insurance brokerage and that we are going to try to clarify in this post. Let's get started!
The raison d'être of life insurance
The main purpose of life insurance is to ensuring that our loved ones have a source of income in the event of our death. In other words, it is a way of replacing the livelihood that a person provided during his or her lifetime. In this case, life insurance serves to cover the backs of the heirs or the persons designated by the contracting party. If we are suddenly deceased, the family loses income and expenses are incurred (e.g. if someone has to look after our children if the spouse continues to work).
However, the definition of life insurance goes beyond death, The classic is the life-risk insurance, which covers the insured against two perils: death and disability. You can even go further and insure yourself against professional incapacity.
That is why, as PIB Group Iberia always insists, life insurance serves to safeguard the financial security of various profiles: from families with mortgages to single people who, in the event of an accident or a serious health problem, could face serious financial problems.
What is life insurance for families with children for?
“Security for you and your loved ones. This is the message that is always conveyed when we talk about life insurance for families, which is so important, especially when there are dependent children. In the event of death or ancillary benefits such as serious illness, the rest of the family would have a livelihood. Historically, it has been used to compensate for pensions such as widows” or orphans' pensions.
Life insurance to maintain quality of life in the face of disability
At PIB Group Iberia we always inform our clients about all the possibilities of life insurance and how important it is in certain cases to opt for a policy that goes beyond absolute disability. Here we talk about the coverage of permanent total (or professional) disability, an insurance solution that more and more professionals such as doctors, lawyers, architects and many other workers prefer to cover this risk. Equally, if you depend on your physical body to work, occupational disability will also be important for you.
What is life insurance for high net worth individuals?
Again, in the case of disability, having a life insurance policy helps to pay for the costs of maintaining the estate, especially when it is large. Similarly, in the event of the death of the policyholder, it provides financial relief for the heirs who have to pay inheritance tax. In the event of inheriting an estate, this policy helps to obtain the necessary liquidity to meet the heavy taxes.
What is life insurance for when taking out a mortgage?
Although the law does not oblige you to have life insurance when signing the mortgage, most banks have it as a requirement when receiving the mortgage loan. Therefore, in practice it becomes compulsory.
A mortgage life insurance guarantees the family's financial stability against the mortgage in the event of death or, if it has been taken out, permanent disability.
However, what is not compulsory is to take it out with the entity with which you sign the mortgage. In fact, the law protects you to compare different mortgage life insurances and choose the one that offers you the best conditions.. For this reason, we recommend that you seek professional help such as ours to take out mortgage life insurance. As we have seen, it goes beyond a mere formality, because when it comes to being well protected, the coverage we have chosen will count a lot: death, absolute and permanent disability, professional and permanent disability, additional capital in case of death or disability due to accident.
What is life insurance for single people without children for?
Just as it is widely accepted that life insurance is important for a family with children, we do not tend to see it as important for a single person without children. However, life insurance is very convenient to protect us against a serious event that could lead to disability (again, it is important to differentiate between total and professional disability). Especially when, in addition to seeing our income reduced, we have to add the cost of care. Here you have all the information about what is life insurance for if you are single?.
And so much for our review of the cases in which this policy perfectly fulfils its function of being that “cushion” against the vicissitudes of life.
If you would like us to advise you on choosing the life insurance that best suits your circumstances, we will be delighted to help you. After 40 years as an insurance broker, we have exclusive agreements with life insurance companies that allow us to offer our clients beneficial conditions. Get in touch with us.
