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How does life insurance work? Check out 5 common questions

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How does life insurance work

Check out some tips for those who want to buy life insurance.

How does life insurance work? How much? What guarantees does it offer? Is it the same as personal accident insurance? These and other questions are very common for those who want to buy this type of service. Check it out below.

1. What is life insurance and how does it work?

Life insurance is a contract made with an insurer to guarantee your financial security, as well as that of your dependents, at unexpected times.

You can choose the coverages that meet your demands, and also indicate who will be your beneficiaries – it can be more than one person.

But, after all, what is the amount paid to have these services available? The cost of life insurance may vary according to the coverage selected, depending on your goals and aspects such as age group, profession, sex, and habits of the insured.

Once the contract is made, the insurer is responsible for paying a previously established amount (indemnity) in case any of the accidents contracted in the policy happen.

In these situations, you or your beneficiary must contact the insurer and report what happened. The company will request the submission of the necessary documentation, which must go through an analysis and approval to then release the amount in question.

We remind you that it is very important to notify your loved ones where insurance documents, such as the policy, will be kept to facilitate the process.

2. What is the difference between life insurance and personal accident insurance?

Contrary to what many people think, life insurance is not the same as personal accident insurance. While the former gives the right to compensation in the case of natural death or illness, the latter, although it is more affordable, covers only cases of death or disability caused by accidents.

Some people see life insurance as something they will pay dearly for, but they will never be able to enjoy it, however, these are erroneous thoughts. This is because it can be used in life in specific cases, which we will discuss later.

What’s more, the cost can be much less than we usually pay to protect our car or apartment, for example – and maintaining the family’s quality of life should be a priority.

3. Why you should take out life insurance?

Many people do not include life insurance in their planning, as they do not find themselves facing any fatality. However, unforeseen events happen all the time and, therefore, prevention is always the best solution.

Buying life insurance aims to promote financial protection precisely in the event of some misfortune happening. Therefore, if you have a good quality of life and want to cherish the continuity of this standard, you should consider this option.

Therefore, taking out life insurance shows concern and appreciation for the family, as it guarantees the necessary resources for dependents in times of difficulty. Also, you can enjoy the benefits of life depending on the situation.

4. What are the guarantees for life insurance?

Life insurance guarantees vary according to the contracted plan. However, policies cover accidental or natural death and, in some cases, ensure protection for total or partial permanent disability due to an accident or serious illness.

In detail, when contracting insurance, the contractor and his dependents can have protection against:

  • death;
  • total or partial permanent disability by accident (IPA);
  • total permanent disability by accident (IPTA);
  • increased permanent disability due to accident (IPAM);
  • total permanent functional disability due to disease (IFPD);
  • total permanent disability due to illness (ILPD);
  • medical, hospital, and dental expenses (DMHO);
  • temporary disability benefits (DIT);
  • daily rates for hospitalization (IHL);
  • serious diseases (DG).

In cases of serious illness, a health plan covers only consultations, basic exams, and hospitalization. He does not pay for the patient’s transportation, special care, and necessary daily remedies.

These values ​​are high and can compromise the family’s financial situation. Thus, it is essential to have life insurance to ensure greater support in relation to these costs.

When buying this service, you receive financial aid for expenses in diagnosing Alzheimer’s, Stroke, cancer, acute myocardial infarction, chronic renal failure, and loss of hearing, speech, or vision.

Other coverages are for limb paralysis, bypass surgery, and heart, liver, marrow, pancreas, lung, or kidney transplants. In this way, moments of family insecurity are taken more easily.

One of the benefits for the insured is the additional indemnity in need of ICU admission. The daily rates are paid for clinical or surgical treatments caused by illness or accident, and which cannot be done at home, office, or clinic. With that, you can do the proper treatment without compromising your income.

5. How to take out life insurance?

To buy life insurance in line with your goals and needs, you must first look for a company that specializes in insurance that offers quality plans and affordable prices.

Having chosen the insurance company, one should understand the coverage available and assess which one is best suited to your family. Next, calculate the insured capital, and, before signing the contract, evaluate factors such as:

lack of the policy;
geographical coverage of coverage;
excluded risks;
The maximum amount of insured capital;
Prize amount;
product availability under specific policies.

Take advantage and do a simulation to set up the ideal plan thinking about your financial security and that of your dependents.

Life insurance, private pension and investments: do not confuse these products

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Life insurance, private pension and investments

They are important in financial planning, and their differences make them complementary

The Americans have increasingly understood the different products aimed at financial planning and its purposes, but there is still some confusion, for example, in the case of individual life insurance and private pension. Both are often seen as products that compete for the same space in financial planning, but in reality, they should be seen as complementary tools.

Both life insurance and private pension plans look to the long term, however, the similarities end there. Each has specific functions and benefits. The pension products aim at retirement, allow the choice between progressive or regressive tax regimes, and the reduction of the tax base by up to 12% – when the Income Tax (IR) is declared in full and contributions are made in the PGBL.

In addition, they use specially constituted investment funds, which do not incur quota-sharing, a semiannual collection of income tax expected in most conventional investment funds and which reduces profitability in the long run.

Individual life insurance, even the so-called redeemable ones, aims to protect the financial condition of the beneficiaries in the event of the insured’s early and unexpected absence, or the financial condition of the client himself, in situations that can transform his life, such as disability accident, serious illness, and even hospital admissions. Therefore, they are not and should not be confused with investment or social security.

Because of these characteristics, many experts recommend that people consider life insurance, pension plans, and investments as complementary products in their financial planning. Investment funds, therefore, are aimed at accumulating equity; private pension aims at a more comfortable retirement; Life insurance, in turn, is essential for succession purposes or to help the insured himself and his family to deal with possible problems along the way, such as early absences, serious illnesses, hospitalizations, or disability.

The amount accumulated in the funds of the pension products, through the contributions made and the profitability earned, will define retirement income, with no guarantee of value.

The indemnity of life insurance does not depend on the amount of installments paid or profitability, since, immediately after the policy is issued, protection considers the full amount contracted.

For example, even if the customer has only paid a portion of the insurance contract when a claim occurs, the beneficiary may receive the full amount contracted. That is, the product does not depend on accumulation and, after the first payment, the insured is already covered.

How does redeemable insurance work?

The redeemable insurance has a specific characteristic: it allows the insured to redeem an amount when necessary. However, when requesting the receipt of part of this amount, the protection amount is reduced, and, in cases where the entire available amount is accessed, the policy is automatically canceled.

This particularity of redeemable life insurance aims to give more flexibility to the insured, and should not be confused with the return of installments paid, profitability, or financial gains.

When hiring life insurance, it is important to provide all the health information requested in a complete and correct manner, in addition to carefully reading the general, special conditions, and terms of the policy to know the situations covered.

insurance or pension

A benefit for succession planning found in pension plans and life insurance is the fact that the death indemnity is exempt from income tax and the possibility to choose beneficiaries other than the legal heirs.

However, an exclusive benefit of life insurance is that it is not considered an inheritance; therefore, it is not subject to the Tax on Transmission Cause Mortis and Donation, called by many an inheritance tax. As the inventory process involves costs for the heirs, and, in many cases, can consume 15% to 20% of the total amount involved, it is normal to take out life insurance to cover these expenses and ensure the financial stability of the family during its resolution.

Insurance solutions can also be used in life

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Insurance solutions can also be used in life

Insurance can bring benefits in situations such as disability and serious illnesses

There are many people who understand that life insurance is death only as a cover. In fact, this type of product is just one of several options that the market offers.

Coverages whose beneficiary is the client and, therefore, are used in life, are also good alternatives for financial planning.

The insurance for disability exists to ensure that the customer will bear the costs under their responsibility if you become unable to generate income due to an unforeseen caused by accident or illness.

The purpose of this type of coverage is to guarantee peace of mind for income protection.

For temporary cases, a solution in the life insurance market is Temporary Disability Daily (DIT) coverage. “In general, the operation of this product is very simple.

In the case of temporary leave from work, caused by accident or illness, the client receives a daily rate, observing the value and specifics of the contracted plan ”.

What if you were diagnosed with diseases like cancer, Alzheimer’s disease, stroke, or acute myocardial infarction? Would it be important to have a reserve for specific treatment without affecting your savings?

It is for this purpose that insurers offer the coverage of Serious Diseases.

“Serious Illness insurance is complete protection designed to support you in the discovery of more complex health problems.

With it, in the case of diagnosis of any of the more than ten covered diseases, you receive the contracted amount at once to help with treatment expenses or other expenses ”.

Life insurance: service doesn’t just cover death and it’s simpler than it looks

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Life insurance

Life insurance, differently from what many think, is not only intended to indemnify the family in cases of death of the contractor. Over time, the product has become more sophisticated, adding different covers to be used in life and which ensure greater tranquility and comfort in situations such as illnesses, personal accidents, or loss of income. With this, the product becomes interesting not only for married people or children but also for young people and professionals, subject to a series of unforeseen events. The choice of the best product depends on the knowledge of the real needs of the contractor. Knowing a little about “insurers”, those terms that are in the contract and often confuse also helps.

“For this reason, the need for brokers to act as consultants, find the best alternative for that client and provide all the support for him to make a secure contract,” explains Dayana. “Life insurance is the best way to protect the family and the person because unforeseen events occur, compromising work capacity and income”, he adds.

Life insurance covers, by definition, three social risks: death, disability, whether temporary, permanent, partial, or even total, and survival. The latter is linked to the need for resources to cover the loss of work capacity as a result of aging. Everyone is subject to these risks, to a greater or lesser extent depending on the occupation, age, and existence or concern for dependents.

There are several coverages in addition to the indemnity for death, such as Serious Diseases which guarantees resources in case of health problems such as cancer, stroke, and infarction, Temporary or Permanent Disability, Hospitalization (IHL) among others. In the specific case of the death indemnity, there are products that allow the choice of how the family will receive the resource: single capital or as monthly income.

Terms used in life insurance contracts may seem difficult, but they are not

The policy, for example, is nothing more than the closed document between the parties that defines the rights and duties of the insured and the insurer. It must contain the general, particular and special conditions of the contracts, in addition to setting coverages. Insured capital, on the other hand, is the financial importance of that contract, that is, the amount to be indemnified in case of some of the events provided for in the policy. These events, such as death, personal accident, illness, etc. they are called claims.

Another term that can be confusing is the deductible, better known in cases of insurance for theft or accidents such as vehicles. The deductible is also applicable for coverages such as hospital rates (IHL) or temporary disability rates (DIT). In this case, the deductible is charged in days. For example, in the DIT, the payment starts to take effect after the first 10 days of absence or, in the case of the hospital stay, it is paid only from the third day of hospitalization, but retroactively.

Finally, another jargon of the sector is the premium, which is not received but paid. It is nothing more than the amount the insured person pays to be entitled to that coverage.

What is important to know before Purchasing life insurance

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Life insurance is not just a service for older people.

Life insurance has the main objective of guaranteeing the financial protection of those you would like to see supported in your absence. This protection does not only work in the event of the death of the provider, it can also be used in other situations such as serious illnesses, accidents, and other unforeseen events that may harm your financial security and that of your family.

Insurance protection can be for a lifetime or for a fixed period of time, with coverage for five to 30 years, for example. In the case of temporary insurance, when the contract ends, protection ends.

The product, however, cannot be confused with an investment, warn experts. The correct thing is to understand life insurance as financial protection in case of unforeseen circumstances.

life insurance for …..

Life insurance is not only a service for older people, in fact, but it can also be taken out by young people and this earlier hire can even be a favorable point.

But what would be the ideal time to take out insurance? Now. You never know when unforeseen events can happen and, taking out insurance as soon as possible can bring more peace of mind to your decisions and plan your future and those you intend to protect, in addition to a more attractive price.

In the event of unforeseen events, insurance can pay compensation in the diagnosis of a disease, avoiding, for example, that you need to sell your assets or use your applications. In other cases, life insurance can offer liquidity to the heirs, facilitating the inventory process.

Because of this, when hiring life insurance keep in mind that it is important to map all your needs and / or the needs of those you want to offer financial security in the case of your early absence, preferably with the help of a specialized professional.

The best tips for making a successful home insurance claim

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The best tips for making a successful home insurance claim

Insurance is a financial product increasingly used by us and this is a good indication of the maturity of our Financial Education. In this context, one of the types of insurance that are becoming popular is Home Insurance.

We’ve talked about other types of insurance, such as insurance cars, life insurance, and insurance for mobile phones, giving some tips and suggestions on how to purchase these products. In general, the recommendations are the same, but there are always some differences.

The first recommendation is common for any type of insurance: search, search, and search. It takes work, but it is worth it, the price differences between the different home insurance can reach up to 40%!

Remember that when doing research, you need to pay close attention to the terms of the contract. For example, check the deductible of each insurance and also the amount of indemnity in the event of a claim. In addition, carefully analyze the coverage of the home insurance contract, that is, which claims will be covered: flooding, theft, assault, etc.

That is, home insurance can be really cheaper just because it offers limited coverage and very low indemnity amounts. This is not necessarily a bad thing, but you should analyze and decide which is the best “service package” for you.

As a reference, we list below some of the most frequently asked questions about home insurance.

1- What are the home insurance coverage?

The main coverage covers damage caused by fires, lightning strikes, and an explosion caused by the gas used in domestic use (when not generated in insured locations) and its consequences, such as collapse, the impossibility of protection or removal of salvage, expenses with fire fighting, rescue and debris from the site.

However, there may be other coverages, such as, for example, that indemnify damages resulting from fires caused by an explosion of appliances or substances of any nature (not included in the main cover), or due to other causes such as earthquake, burned in the countryside, windstorm, vehicle impact, aircraft crash, electrical damage, among others.

2- What are covered risks and excluded risks?

Covered risks are those foreseen and described in each of the coverages, which will have eventual losses resulting from their occurrence covered by the insurance.
Excluded risks are those whose resulting losses will not be indemnified by insurance unless specific coverage is contracted. As an example, we have:
1. Volcanic eruption, flood or another upheaval in nature;
2. Internal or external war, civil unrest, rebellion, insurrection, etc .;
3. Loss of profits and emerging damages;
4. Fires in rural areas;
5. Theft or theft.

3- What are assets not covered by insurance?

They are those assets, specified in the policy, for which the insurer will not indemnify the losses, even if they come from covered risks. In general, they are the following:

  • Stones, precious metals, works and objects of art in general, goods of great value that are easily destroyed or damaged by fire, jewelry, rarities, etc .;
  • Manuscripts, plans, projects, paper money, stamps, checks, credit papers, minted coins, accounting books, etc .;
  • Third-party goods, except when such goods are under the responsibility of the insured for repairs or maintenance and provided that there are records (documents) proving, through invoices or service order, their entry and existence at the insured location.

4- What is a franchise?

It is the amount or percentage, expressed in the policy, that represents the part of the loss that must be borne by the insured person per claim. Thus, if the amount of the loss for a particular claim does not exceed the deductible, the insurer will not indemnify the insured.

The difference between life insurance and pension

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The difference between life insurance and pension

Some people may be confused when choosing between life insurance or a private pension plan.

The pension plan aims to be long-term savings, that is, it is part of your retirement planning. Social security is a way for you to save today to have a reserve when you stop working.

Life insurance is an immediate protection. With the policy in hand, whenever an event is covered by the policy occurs, the insured or the beneficiary receives what was agreed upon when contracting the insurance.

Both protections are important for a successful financial strategy.

Private pension

Private Pension was born to complement Social Security and compose the retirement planning of clients.

Usually, banks and independent insurers offer this type of product. In private pension plans, the customer chooses the amount of the contribution and the frequency with which it will be made. The amount to be received will be based on the contribution that was made and the results of the financial investments linked to the plan.

Life insurance

Life insurance is considered a protection against unforeseen circumstances. So, contrary to what many people imagine, it is a product suitable for people of all ages. If you have someone you would like to support in your absence, then you should hire this service.

After all, this is the goal of life insurance: to guarantee the financial security of your dependents for a certain period of time if you are unable to do so and cannot be confused with a private pension plan.

What is the difference between personal accident insurance and life insurance

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What is the difference between personal accident insurance and life insurance

Personal accident insurance generally costs less than life insurance.

The basic difference between death coverage in life insurance and personal accident insurance is that the first guarantees compensation for natural or accidental death, while this coverage in personal accident insurance, as the name says, will be paid only in the event of death from a covered personal accident.

Exactly because it has less comprehensive coverage, personal accident insurance generally costs less than life. In addition, the amount paid for personal accident insurance usually does not differentiate between young and old, while the calculation of the price of life insurance varies according to the age of the insured.

Both, however, have a common advantage. The indemnity received by family members and/or beneficiaries does not enter the inventory and is not responsible for any debts left by the insured. The indemnity amount (insured capital) is paid directly to the beneficiaries, completely exempt from taxes.

Who is recommended for personal accident insurance?

Those who work for themselves, entrepreneurs, and professionals depend on good physical conditions to carry out their activities. An accident can force them to stop working temporarily, meaning a disruption in their income.

This is a condition in which it is certainly worth having this insurance. It is also recommended for those who work with a formal contract in a company that does not provide the employee with the option to adhere to a collective personal accident policy.

A young, single person, without children, independent and in good health represents a low risk of death, due to the natural order of life. But, if you still do not have the financial security that can guarantee the payment of your expenses in case you are forced to leave work due to an accident, you will also have a good motivation to take out insurance.

The cost of personal accident insurance is one of the lowest in the market, making it possible to contract complementary coverages. Among them, the non-monthly payment of insurance, in case the insured becomes unemployed, and the payment of school fees for the insured’s children.

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