When we take out a life insurance policy, we seek to guarantee that a capital sum is paid out depending on the contingency or guarantee in question. 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 mentioned 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 covered):
- Death for any reason (illness or accident)
- Permanent disability
- Absolute: which disqualifies the holder from exercising any profession whatsoever
- Total: is more specific, as it only prevents us from working in our usual profession (it is common in doctors, plumbers...).
- Serious illnessless frequent, but growing, given the number of cases of cancer, strokes and heart attacks 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 the event of death.
In this way, if we do not write anything specific, the policy defaults to pay:
- In case of deatheither to legal heirs or to spouse and children in equal shares
- In case of disability or serious illness: the money goes to the policyholder 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 life insurance. However, they can oblige us to take out the insurance, but not to take it out with them.
The problem of mortgage-linked insurance, The thing is that because they have us tied down, on the one hand, they don't care about offering competitive conditions in terms of price and coverage. That's why it's important to compare and see if it's in my interest to subscribe to another provider.
The objective pursued by the financial institution 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.
Keeping insurance taxation in mind
The compensation paid by the company, of course, has 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 (because of the exemptions for the tax authorities).
In the case of disability, for example, if the policyholder, the insured and the 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 insurance, The best price, and in addition, the advice you need to take into account these important concepts: taxation, beneficiaries, tax relief, choosing the sum insured of the life insurance policy... we are your Insurance Brokerage.
