What are life insurance premiums?
Life insurance is a sensible option to cover you and your family’s needs in case of death, accident or serious illness. However, we are still very ignorant about this subject. One of the questions we often ask ourselves is how much the life insurance premium will cost us in case of an emergency.
Logically, this amount depends on several factors and, above all, to a greater or lesser extent on the situation in which we find ourselves. For example, the amount paid in the event of death is not the same as the amount paid in the event of disability or incapacity for work.
Life insurance at risk
Before you try to take out life insurance, you first need to know what you are dealing with. It should be clear whether the policy includes extensive additional coverage and why you need to obtain it. Next, determine the amount of coverage you need to collect. Generally, the maximum amount is the amount agreed upon when you enter into a formal contract, but it may vary depending on the terms agreed upon when you enter into the contract.
There are different types of life insurance, but the most common, at least in Spain, is risk insurance. This insurance provides important benefits in the event of death or disability. It goes without saying that, according to the latest figures compiled by the Memoria Social del Seguro 2021, the average coverage of this type of insurance is $50,000. Of this, 32% corresponds to disability and incapacity for work and the remaining percentage to death.
This is also the most common type. However, unlike the other types of insurance, which also cover disability or incapacity for work, here the insured only receives benefits in the event of death. If the insured dies, he or she receives the full amount agreed in the policy in advance.
In addition, there are two types of life insurance.
Discount. The first type provides for a fixed amount of insurance capital, which decreases from time to time. In the event of death, the beneficiary will receive the amount accrued at the time of death instead of the initially agreed amount.
Increase. Conversely. From time to time, usually once a year, a small percentage of about 5% is added to the previous amount. The agreed amount is collected at the time of death.
Whole life insurance
This is a very comprehensive insurance that offers more coverage than term life insurance. In this case, it provides lifetime coverage so that, in the event of the insured’s death, the beneficiary can receive the amount in cash or in the form of a loan. This amount is specified in the policy in advance.
Life insurance benefits can be obtained in several ways
Insurers usually offer a lump sum, but it is also possible to receive the amount with interest. In this case, the insurance company retains the insurance benefit and pays it periodically to the beneficiary in the form of interest.
It is also possible to receive benefits over a period of time. A fixed amount is always paid to the beneficiary over a fixed period of time.
Finally, there is a lifetime reimbursement system. This means that the insurance company pays the benefit amount each month for the rest of your life.