Life insurance is one of the most important insurances for anyone and the only way to prepare for certain future situations. As you know, this is also the protection that any bank that wants to take out a mortgage needs.
When buying life insurance, we don’t always look at all the points in detail. The amount paid is more and some variables must be taken into account. In this article, we will help you with an in-depth analysis.
Why is life insurance so important?
Life insurance is a way to keep you and your family safe in the event of disability or death. The risk of not being able to work in the future, affecting your monthly income, is one of the main reasons for signing this contract. Therefore, depending on your age and the stage of life you are in, it may be important to start thinking about taking out life insurance.
These products also guarantee financial stability by guaranteeing that in the event of the death of the insured, the beneficiary will receive a predefined capital.
What types of coverage?
Life insurance is usually contracted with an insurer at the time the mortgage loan is stipulated, since it involves payment to the bank of the amount owed in the event of the death or disability of the insured . It is also celebrated by many people outside of this sphere, as a way of guaranteeing financial support for their children or other beneficiaries.
One of the most important issues to resolve when purchasing life insurance is the type of coverage . This condition is fundamental, since it will define in which situation the insurance is activated.
There are two main types of coverage, and death coverage is already guaranteed from the start:
1. Absolute and definitive disability
IAD coverage can be activated in the event of an illness or injury involving the insured’s total inability to work . Likewise, for the life insurance to be activated, the person must remain Dependent on third parties for all basic functions. , how to eat and do your personal hygiene. This coverage requires that the policyholder receive a disability greater than 90%.
2. Total and permanent disability
If you opt for the ITP coverage – requested by many insurance companies, permanent disability for the profession or compatible activity (IDPAC) – the life insurance will be activated when, as a result of an illness or accident:
- The insured is totally and permanently unable to carry out his professional activity or a compatible activity ;
- If it is clinically established that the insured has a permanent functional disability equal to or greater than 60 or 65% (depending on the insurers), it is not necessary to depend on third parties.
How to save on life insurance?
As we already mentioned, most people turn to life insurance when negotiating a mortgage. What happens is that many people choose to take out the insurance provided by the bank and end up paying a value much higher than average.
Now, the first thing to do when taking out life insurance is to analyze several of them, advice from different insurance companies, in order to choose the most beneficial one. In this case, you should obtain information from professional professionals, such as the DS SEGUROS team, who will be able to advise you on the best options.
Another tip to save hundreds of euros a year is to transfer an already signed life insurance. Many still do not know that they can (and should) assign insurance to save on the family budget
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What to take into account when choosing your insurance?
1. Awards
That is, the amount you will pay to the insurance company each year. Incentives may have variable cyclicality, including risk coverage costs, acquisition, administration and collection costs, costs associated with issuing policies, and taxes.
2. Coverage
Contrary to what happened a few years ago, the coverage currently recommended by most banks in real estate credit contracts is total and permanent disability. That’s because, in recent decades, some clients have had unpleasant surprises: discovering that their health conditions prevented them from working and that they did not meet insurance-mandated disabilities. Absolute and definitive disability and he had to continue paying his credit.
But keep in mind that IAD insurance has significantly lower premiums than ITP insurance.
3. Capital
If the insurance is linked to a home loan, you must know what capital you want to contract and decide between fixed capital or automatic capital renewal. Please note that in a policy with two insureds, some insurers only pay 50% of the lump sum if one of the insureds dies or becomes disabled.
4. Other conditions
In addition to the basic criteria, there are other things to consider when shopping for life insurance. For example, did you know that some insurance companies stop charging monthly premiums when the insured loses their job? Be aware of such situations and prioritize what you value most.
How to choose the best life insurance?
Choosing the best life insurance offer is not always easy. There are dozens of insurance companies in the market that offer different conditions and values, which is why it is so important to seek advice from a company like DS SEGUROS.
We work with practically all national insurers, which allows us to offer our clients the best value for money and offer a wide range of options, whatever the coverage chosen.
Trust our team of professionals to find the right solution for you and enjoy specialized and personalized advice. Make a free simulation now!