A good life insurance policy is essential to guarantee serenity and economic security to the policyholder’s family members if the latter’s life is affected by a certain event provided for in the contract. It can be taken out through an insurance company or through a bancassurance.
1Life insurance: what is it?
Life insurance is a contract stipulated between the policyholder and the insurance company, through which, following the payment of an annual premium, the beneficiary is guaranteed a capital or a cash refund, in the event that the insured is in situations of economic difficulty, premature death , serious illness (critical illness insurance) or disability . Good life insurance is essential to ensure serenity and economic security for the policyholder’s family members.
The policy can be stipulated on one’s own life or on that of a third party. The premium is usually paid monthly, although you can opt for a semi-annual or annual payment. The cost of life insurance varies according to numerous factors : from the rates applied by each company to the type of coverage chosen, or according to the risk that the insured event (death, disability, etc.) occurs. With pure risk insurance , a particular life branch policy contract, you can have coverage of the life risk and/or the permanent disability risk.
Before signing the contract, in fact, the insurance company delivers a questionnaire to the potential customer to fill out, in which all the information useful for calculating the risk must be entered: habitual professional of the insured, lifestyle habits (for example if he is a smoker or if you practice extreme sports), information on your medical records (including any family history of hereditary diseases).
The contracting party of a life policy must promptly communicate any change of profession and any other modification of his lifestyle or health conditions, so that his company can recalculate the risk and therefore the amount of the premium. Obviously, false or incomplete declarations can affect the right to compensation.
To facilitate the underwriting of life insurance policies, tax incentives are envisaged which consist of deductions on the tax return.
2Life insurance: the coverage provided
The types of life insurance differ according to the type of coverage : life, death or disability. The most common are the following:
- Death insurance
It is the most widespread life insurance policy: in the event of the insured person’s premature death, his or her family beneficiaries obtain a pre-established cash capital from the insurance company, or an annuity (depending on the terms of the contract).
- Life insurance
The life insurance policy is a savings instrument to guarantee a serene old age: it consists of investing in an accumulation plan in order to consolidate savings and be able to dispose of them at the pre-established deadline.
- Mixed life policies
Mixed life policies are the most complete ever as they protect against both types of event guaranteed by life and death policies, therefore both the premature death of the insured and the case of great longevity. But that’s not all: they can also cover other types of events, such as disability, job loss, injury or illness.
- Home loan insurance
It is a very important policy that guarantees the balance of the loan in the event of the contractor’s departure or other event such as job loss or incapacity.
- Unit linked and index linked life policies
They are mixed insurance-financial instruments: through this type of policy the policyholder invests in funds for a period equal to his life.
3Life insurance: who is it for?
Life insurance is particularly recommended (indeed, we would dare to say that it is essential) for those who are the main or even the only source of income for their family , in order to guarantee a peaceful future and financial support for their loved ones even in case of extreme events.
At the same time, life insurance is very important if one’s family has been exposed to an important debt , such as a mortgage, an investment or a loan, because in this case it is possible to obtain the sum useful to repay the debt even in the event of a serious unexpected event.
4How much does life insurance cost
The cost of life insurance depends on many factors, such as health conditions, lifestyle and the duration of the policy. The main elements that influence the insurance premium are as follows:
- Choice covers
- Insured amount
- Age of the policyholder
- Health conditions of the policyholder
5Tax deduction for life insurance
Life insurance allows you to benefit from the tax deduction up to 19% of the amounts paid and up to a maximum of 530 euros.
6Life insurance as a pledge
Life insurance can be pledged to apply for financing, such as a mortgage to buy a home . Often it is the banks themselves that require the taking out of a life insurance policy as a guarantee before the loan is disbursed.