Life insurance is a contract that provides, upon the death of the insured, compensation to his or her heirs or beneficiaries.
Life insurance seeks to guarantee the protection of the people in whose care the insured is responsible. In the event of his death , his beneficiaries or heirs have access to compensation .
This compensation is called insured capital and can be paid in a single time or as financial income. Generally, the beneficiaries are the family members of the insured , although they can also be their partners or creditors.
Before moving forward, we are going to establish the etymological origin of the two central words that give shape to the term at hand in order to better understand its meaning. Thus, the word safe comes from the Latin word securus , which can be translated as "calm." Meanwhile, life also emanates from Greek, more precisely from the noun bios , which is synonymous with "life."
Why opt for life insurance
The reasons that lead many people to choose to take out life insurance are circumstances such as that their family depends financially on them or that their pension is very low and, in the event that they die, their children and spouses would not be able to survive on them. that.
These reasons are also taken into account for the opposite, for not contracting this aforementioned insurance. Thus, it is established that single people or people who do not have any type of family position do not need it.
Classification according to type
Life insurance can be classified according to its duration (term or whole life), its type of premium (level premium, where the payment is constant, and risk premium, where it increases according to the age of the insured) or the number of insured people covered by the policy (individual, group or multi-head insurance ).
Insurers affirm that, thanks to the combination of provision and solidarity of the system , the insured obtains immediate coverage for significant amounts, even when individual contributions are reduced.
With life insurance, the insured seeks to protect his or her family.
Factors to consider when purchasing life insurance
The age of your partner and your children, as well as the rest of the people who depend on the insured, if there are any of its members with a disability, the number of people who are supported by that person's salary or the financial amount necessary for those can move forward are some of the parameters that must be taken into account when choosing life insurance or another.
In the same way, it is also important that the individual who is clear that he wants to take out life insurance bears in mind other factors of great importance such as, for example, the reliability of the insurance company.
In some countries, such as the United States , life insurance is not only a source of income replacement, but also allows you to pay the balance of the mortgage or other debts at the time of the death of the insured; pay inheritance taxes; pay funeral expenses; provide funds for the education of descendants; and even make charitable donations.
On the other hand, there are policies that even allow the insured to benefit during life , for example by complementing retirement (when someone who pays for their life insurance for many years and reaches old age without having to worry about the financial well-being of their family).