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5 reasons to buy life insurance

Every day more Americans choose to take out life insurance. © iStock

Have you thought about taking out life insurance? Would you like to ensure the future of your family in case you die? If so, we invite you to learn five reasons why subscribing coverage in the event of death is an excellent decision. Discover this guide.

Although the idea is not to live thinking that tomorrow we are going to die, the question of whether it is convenient or not to have life insurance is your issue that worries many Americans.

Investment or just one more expense? The truth is that although subscribing to a life policy is not mandatory, opting for this alternative could change the lives of your loved ones in moments as painful as death or a serious accident.

In this sense, the question you must ask yourself is only one: if I die, what does this type of coverage offer me?

You need to keep in mind that life insurance acts as a real buffer against an event as unfortunate as your own death or that of a loved one.

A policy of this type will not be able to cover or repair emotional damages, but it will be able to help the family to better cope with everything that will fall on their shoulders at the time of death.

The advantages of having a life policy are the following:

Protect your family financially

Life insurance acts as an economic aid because its purpose is to protect and provide coverage to your family that allows them to support the lack of income due to your death.

The economic impact after the death of an important member of a family group is usually quite large, therefore, these types of policies serve to cushion this burden.

Life insurance is highly indicated for those people on whom your family depends.

The premium that the beneficiaries receive after the death of the insured can help cushion the economic impact generated. Do not forget that you can change the beneficiary of your Life insurance at any time you want.

The birth of a child or your own marriage can be a good time to review your life insurance.

Guarantee the future of your children

One of the biggest concerns for parents of school-age children is what will happen to their studies if I have an accident or die?

Given this, life insurance can offer you the peace of mind you need. Certain types of Life insurance offer the possibility of guaranteeing the continuity of the studies of the insured’s children in the event of their death.

Keeps your home safe

Are you still paying the mortgage on your house? In this case, life insurance can protect your home and family in the event you die.

It is important that you know that coverage of this type can pay the remaining installments of the mortgage in the event that the debtor dies.

Offers coverage against disability

Being healthy and in good health is the wish of all of us. However, many times things do not end as planned and a serious accident can leave us crippled for the rest of our lives.

In this case, our family is unprotected, we are not able to offer the economic stability to which they were accustomed and financial problems arise quickly.

Today, when you take out life insurance, you have the possibility of accessing complementary coverage that will protect you in the event of a disabling accident and that you are unable to continue developing your professional activity.

Helps you with a serious illness

Although health insurance often protects against serious illnesses and covers the associated medical costs, having additional coverage within your life insurance against such a situation is highly advisable.

Although traditional health insurance will reimburse you for medical and hospital expenses associated with your illness, life insurance may cover part or all of the capital stipulated in the premium.

Life insurance: real help

Many Americans believe that taking out life insurance is a waste of money and time. However, in an extreme situation and from which no one is safe, this type of coverage can save the future of your family.

5 things you need to know about life insurance

There are several points that you must take into account when purchasing life insurance. © iStock

Before purchasing life insurance, you need to know certain points that could help you make a better decision. What is the policy of this type? what are their characteristics? What kind of coverage can you get? Find everything you need to know in this complete guide.

More than 80 million Americans have taken out life insurance that protects them against death or disability.

That’s right because of the peace of mind that this type of coverage can give you and your family is very important in the event of a drastic event such as death or a serious accident.

However, before signing policy of this type, it will be necessary for you to fully understand how they work and what their characteristics are.

Let’s review everything you need to know about life insurance below.

What is life insurance?

In case you still do not know, life policies are a type of economic insurance whose purpose is to cover, as agreed in the contract, the needs of the beneficiaries in the event of the death of the insured person or accident with disabling consequences for the same.

What types of insurance are there?

There are several types of Life insurance. They are:

Life Insurance Risk

This type of insurance offers coverage in the event of death. That is, the beneficiary of the policy will receive the capital set in the contract at the time the subscriber dies.

Within Risk Life Insurance, there are two modalities:

  1. Whole Life Insurance: This consists of the payment of the premium being made immediately after the death of the insured.
  2. Term Life Insurance: which consists of covering the risk of death during a specified period of time and previously stipulated in the policy.

Life Insurance Savings

This type of insurance offers life coverage, that is, the insured will be the one who receives the stipulated capital if he lives on the date of fulfillment of the policy.

It could be compared to a long-term deposit since the insured is responsible for paying a monthly or annual premium and then collecting it with a fairly low-risk percentage.

It is important that you know that Savings Life Insurance is used quite a bit to supplement the retirement income.

Mixed Life Insurance

There is also the Mixed Life Insurance, a formula offered by some companies in the country and which offers coverage of the two types of policies mentioned above.

At what age should life insurance be purchased?

Although, as a general rule, the age range to take out life insurance is between 30 and 50 years old, everything will depend on your personal situation.

If you are twenty years old but you are married, you have a child and you also pay a mortgage, the ideal thing is that you think about taking out insurance of this type.

It is important that you know that insurers maintain entry limits from 18 to 65 years. Sooner or later it is very likely that they will reject your request.

In any case, at any time you can review your Life insurance and reevaluate its conditions.

Is there a mandatory amount to insure?

The truth is that there are no impositions of any kind regarding the amount to be insured, as this will depend on each person and the needs they have.

Remember that life insurance is an economic coverage that will allow you or your family to supply the source of income that is altered either by your death or by finding you in a state of disability.

In this sense, the amount to be insured should cover at least the amount of the mortgage and loans that are maintained on the date of subscription of the policy.

Many connoisseurs and the insurance companies themselves advise opting for insurance that covers the five-year salary and future education expenses of the children.

If you want to save on your Life insurance you should compare the market offers and evaluate the conditions of each one.

Who can be the beneficiaries of life insurance?

The beneficiaries of any type of life insurance will be those persons designated by the policyholder at the time of signing the contract.

If you are thinking of subscribing to a policy of this type, you have complete freedom in choosing the person or persons who will benefit from the premium.

Also, don’t forget that you can change the beneficiary of your Health insurance at any time.

5 tips to save on your life insurance

Before deciding on one policy or another, we advise you to review all the points of the contract. © iStock

If you plan to take out life insurance, it is important that you know how to choose the one that best suits your needs and that you compare very well before making your decision. In this guide, you will find everything you need to save money when subscribing a coverage of this type.

If you want to save on your life insurance, the solution is not to opt for the cheapest coverage.

On the contrary, cheap insurance can be considerably more expensive in the long term if you have not paid attention to certain important points at the time of signing the policy.

The first thing to keep in mind is that the coverage you have chosen adapts to what you really need.

Remember that the objective of the insurance is that in the event of a claim you make the least possible outlay of money through an indemnity that covers most of the needs of that moment.

In this sense, there are certain points that you should not forget when hiring your life insurance and thus save as much as possible on the policy. Let’s review some of them:

Choose coverage that suits your needs

If you do not want to end up hiring a cheap policy but that does not offer you the minimum coverage that you and your family need, it is important that you anticipate and know very well what type of life insurance is the best for you.

For this, you must answer the following question: why take out Life insurance?

Look at all the types of policies currently offered by the market, make sure that there is one that meets your requirements, and do not forget to take a look at the complementary coverage.

The most important thing is that you are not guided only by the premium, as there is insurance that is slightly or considerably more expensive but that, in the event of death or accident, can be very convenient.

Avoid falling into current promotions

Insurance companies regularly offer premiums at fairly inexpensive prices that tempt most consumers.

We advise you to be careful and do not rely only on low prices. Generally, this type of insurance is very basic and its coverage is almost nil.

Also, if you go for one of them and then want to add additional coverage, the price will rise dramatically.

Remember also that these types of contracts usually carry many conditions and small print, such as permanence commitments and others.

Analyze all the points of the contract

Before deciding on one policy or another, we advise you to review all the points of the contract.

It is common for a document to include coverage that had not been previously discussed or clauses that take us by surprise.

Given this, do not forget to pay special attention to the following points:

  • Bonuses and discounts
  • Franchises
  • Stays
  • Exclusions
  • Additional guarantees of Life insurance
  • Nominal and effective value in Life insurance

Compare all the offers on the market

Once you know your real needs and that you have analyzed all the points that life insurance contracts include, it is time to compare the different premiums that the market offers you.

Currently, there is a large number of insurers and each of them has an extensive portfolio of products to offer you.

Remember that when comparing, you should not only look at the price but also at a series of points that will make the difference, such as coverage, franchises, conditions, exclusions, discounts, etc.

Request help

If you’ve been trying to find life insurance that won’t overpay you for a while, it may be time to seek out an insurance counselor or mediator.

Insurance mediators are people who do the work for us and seek the best premium according to our requirements, needs, and budget.

In addition, they generally accompany you in the underwriting process and help you in case of any kind of problem with the insurer.

What type of life insurance to purchase

Companies currently offer different types of life insurance. © iStock

Have you made the decision to buy life insurance, but you don’t know what type of policy to choose? Don’t worry, because in this complete guide you will find everything you need to know to subscribe to the coverage that best suits your needs.

To know which is the most appropriate life insurance and what type of coverage you should buy, it is very important to take into account certain criteria such as the number of members of your family group, the age of your children, the needs of the family, possible expenses in education, debts, mortgage payment, etc.

All these factors will determine your needs and your user profile. Therefore, it is necessary that you take the time to analyze them in detail.

So, Risk, Savings, or Mixed Life insurance? Review this guide and find out what type of coverage to choose according to your own needs.

Opt for Risk Life Insurance

Among the three types of life insurance that exist, Risk Life insurance is the most widely contracted in Spain.

This type of policy acts in the event of death by providing the amount set in the contract to the beneficiary or beneficiaries.

When to buy it?

If you identify with any of the following situations, this is most likely the type of insurance you need:

Your family depends on you

If you are the head of the family and most of your household income comes from your work source, this type of coverage is perfect for you.

In this case, the insurance coverage will guarantee the future of your family in the event of death, thus reducing the economic impact that this event may cause to your loved ones.

Do not forget that you can change the beneficiaries of your Life insurance at any time you want.

You are concerned about your children’s education

If you have children, one of your main concerns will be their future and the possibilities that they have to emerge in life.

Giving them a good education and offering them the possibility of continuing a university career is part of your duties and you know that you cannot fail.

But who will take care of these expenses if you are not there?

Risk Life insurance will provide you with the peace of mind you need, as there are numerous policies that guarantee the continuity of your children’s studies after your death.

Your house is mortgaged

Do you have your house mortgaged? Are you afraid to leave the responsibility of the payment to your family in case something happens to you?

One of the most important reasons why we resort to life insurance is to ensure the payment of the mortgage in the event of death. That’s right because if you die, the policy will cover the balance of the mortgage loan.

Choosing Life Insurance Savings

Savings Life Insurance is a type of policy where it is the same policyholder who will benefit from its coverage.

In other words, if you have opted for this type of insurance, upon the expiration date stipulated in the contract, you will be able to receive the fixed capital.

It is important that you know that this type of insurance is aimed at those who want to obtain a return on their savings and enjoy them in life.

For this reason, if you feel identified with any of the following situations, this type of insurance is for you.

You want to make your savings profitable

Although the profitability that you will obtain from insurance like this is not the best, subscribing to a policy of this type will allow you to save without tax obligations until the stipulated time to collect the money.

You want to supplement your retirement

Currently, insurers propose to their clients who wish to complement their retirement in the future, various forms of policies specially designed for this purpose.

Among these options, you can resort to an Insured Pension Plan or an Individual Systematic Savings Plan.

Whatever your decision, it is important that you know that this type of coverage is designed so that once you retire, your income will be higher.

Choosing a Mixed Life Insurance

Finally, if you feel identified with more than one of these situations, it is because perhaps you need a Mixed Life Insurance.

Coverage in case of death and an economic supplement in life can be the real solution to your needs.

How to change the beneficiary in Life insurance?

The holder of a life insurance can change beneficiary during the entire term of the contract. Photo: Freepik

If for any reason you need to change the beneficiary of your Life insurance, it is important that you know the formalities that you will have to carry out this procedure quickly and safely. Follow this complete guide and find out everything you need to know.

Hiring Life insurance is essential when it comes to ensuring the well-being of your family in the event of an accident or illness that costs you your life.

As you should already know, these policies are always associated both with the value of a premium and with one or more beneficiaries, who will be the ones who will receive the agreed money in the event that the owner dies.

As a general rule, the choice of the beneficiary or beneficiaries is made at the time of contracting the insurance with your company and their names must be clearly stipulated in the contract.

However, there are circumstances that make the insurance holder want or have to change the beneficiary.

Let’s review in this guide which are the most common situations that lead to a change of beneficiary and the steps to follow to carry out this procedure.

Who are, generally, the beneficiaries of Life insurance?

In the vast majority of cases, the main beneficiaries are usually the policyholder’s spouses, children, and parents. There are situations where business associates are also on this list.

Normally, the insured names his beneficiaries expressly, designating them with names and surnames. However, the holder can choose a generic form, where he will name the beneficiaries according to their relationship.

It is important to remember that many insurers offer the possibility of naming contingent beneficiaries, who make up the second option of the holder.

This type of beneficiary will only receive the insurance payment in the event that the main beneficiary or beneficiaries cannot or do not want to receive the part of the money that corresponds to them.

When can the beneficiary of Life insurance be changed?

The holder of Life insurance can change part or all of its beneficiaries at any time within the duration of the contract and as many times as it deems appropriate.

There are innumerable reasons that can cause a person to change the beneficiary of their policy, however, marriage, divorce, or the death of the latter are one of the most common causes.

In any of these situations, you should not forget to review your Life insurance.

How is the change of beneficiary of Life insurance requested?

The change of beneficiary of Life insurance is a relatively simple and easy procedure to carry out, however, it is important to know the procedure and the legal forms necessary to carry out this formality in complete safety.

There are two ways to modify the beneficiary designation of a policy of this type:

  1. By means of written communication sent to the insurance company.
  2. Expressly indicating it in the will.

Change of beneficiary by written letter

If you wish to make the change of beneficiary by means of a written letter, you must complete the form provided by your company and stipulate the data of the new person (s) that will appear in the policy, such as:

  • Names and surnames
  • Social Security number
  • Address
  • Relationship

Generally, in this document, two people who do not belong to those mentioned in the list of beneficiaries are requested to testify of the fact.

Do not forget that if you want to register two or more beneficiaries, you must enter what percentage of the policy will correspond to each one.

Change of beneficiary by will

Another way to change the beneficiary of your Life insurance is expressly indicating it in the will. In this case, The law will take into account the wishes of the deceased as long as it has been stipulated in the Certificate of last wills.

This document certifies whether the policyholder has made a will before a notary public in which the provisions contained in the current insurance contract could be altered.

To make the will valid over what is stipulated in the policy, the company must request this document and validate what is stipulated in it.

What exceptions exist when wanting to change the beneficiary of Life insurance?

Although the holder of Life insurance can change the beneficiary at any time and as many times as they want, there are some exceptions that you should know.

  • If you have contracted your policy and have irrevocably designated a beneficiary, you will not be able to change it even if you wish.
  • If when you change beneficiary you violate any law.

You’re getting married? Think about checking your life insurance

Marriage is a good time to review your life insurance. © Pixabay

When you take out life insurance, you certainly do so taking into account the circumstances of the moment. However, on many occasions, your situation changes and it is necessary to reevaluate your needs and those of your family group. To help you, in this guide we tell you when and why to review your policy.

There are many situations that may have led you to take out life insurance. For some, the priority is to ensure the welfare of their families in the event of a serious situation such as illness or death itself.

For others, the idea of ​​having this type of policy is based on other needs, however, the purpose is always the same: to ensure the future of loved ones.

But what happens when your personal situation changes and your family group increases or decreases due to any circumstance?

Your life insurance must adapt to these changes, in this way you can modify the beneficiaries of the policy and any other point of the contract that you need to modify.

In this sense, we advise you that before any important change that occurs in your life, try to review your insurance. We will explain why below.

If you are getting married

Many people take out Life Insurance when they are still single and leave their parents as beneficiaries so that they are not the ones who bear all the expenses after your possible death.

Many also opt for this option so that the parents of the policyholder are not financially helpless if a serious accident occurs.

However, if you find yourself in this situation and your marriage date is approaching or if you plan to start a new life as a couple, it will be important that you review your life policy and include your boyfriend or girlfriend on the list of beneficiaries.

For the birth of a son

Without a doubt, the birth of a child is the most important event that a couple can experience in their entire life. This fact will completely change their day to day and also the routine that the parents followed up to that moment.

There are many things to think about before the arrival of the new member: the baby’s clothes, the hospital, the bedroom, the parents’ work, and a host of other things.

Among them, a procedure that is vitally important is to review Life Insurance. Indeed, your child cannot be left unprotected if an accident or illness occurs that takes your life or that incapacitates you from offering good well-being.

In this sense, we advise you to change the beneficiary of your Life insurance and include your children in the policy to offer them all the necessary coverage to ensure their future.

It is good that you know that there are some insurance companies that even offer guarantees for the education of children. Don’t forget to ask your insurer if they have these options.

If you are going to get divorced

In case of divorce, it will also be necessary to review your Health Insurance and thus not only modify the beneficiaries of the policy but also all the coverage contracted.

Remember that in these types of situations it is not always easy to reach an agreement that leaves both parties happy. That is why we advise you to take things slowly and be sure of the agreement you are going to reach.

If they increase your salary

Have you found a new job with a better salary? Has your boss offered you a raise? In either case, you should think about reviewing your Life Insurance.

By earning more money, you may want to improve the coverage that you bought in the beginning. You can also increase the amount of your insurance and thus improve the benefits and the future of your family in the event of a claim.

If you lose your job

As happens when you receive a salary increase or when you find a new job with better opportunities, in the event of losing your job source it is also convenient that you review your Life Insurance.

Until you find a new position, your financial situation may be affected and you will have to reduce the coverage of your policy in order to save on your Life insurance.

Difference between nominal value and effective value in life insurance

Cash value and face value are two of the important elements that go into permanent life insurance. © iStock

Do you want to take out life insurance but there are certain points that you still do not understand? Follow this comprehensive guide and find out what the concepts of face value and cash value mean. We will also tell you what their differences are and how they influence your insurance premium.

If you want to guarantee the well-being of your family and be sure that you have the best policy, there are certain points that you should know about your Life insurance.

Cash value and face value are two of the important elements that go into permanent life insurance.

It is very necessary that you know the differences that exist between them because they are responsible for increasing or decreasing the amount that will be paid to the beneficiary or beneficiaries after the death of the insured.

Nominal value

In simple terms, face value is the amount of money that the beneficiary (s) of the insurance you have purchased will receive at the time of your death.

It is the value that you grant to the insurer at the time of signing the contract and, regardless of how many years pass before your death, it will always be the same.

Cash value

Rather, the cash value is the payment you will get in the event that life insurance ends or is canceled prior to your death.

It is important that you know that the cash value is obtained through the investments of the insurer.

Cash value is a characteristic of permanent life insurance. Don’t forget that term life insurance only has a face value but cannot benefit from cash value.

Advantages of cash value

Experts recommend that when purchasing permanent life insurance you opt for the cash value option.

Subscribing a policy of this type has several advantages. Let’s review some of them:

  • Depending on the specific terms of your contract, cash value life insurance can be used almost like a savings account.
  • Cash values ​​are tax-deferred, therefore you will not have to pay taxes unless the funds are withdrawn.
  • If the funds are withdrawn to use them, for example, for a policy loan, you will not have to pay the Treasury any amount at the tax level.
  • At the time of your death, the policy beneficiaries can get a higher sum if your policy has additional options associated with it or if there are no funds in the cash value account.

Do not forget that before any change in your life you can review your life insurance at all times.

The cash value in universal life and whole life insurance

Cash value does not act the same for all types of life insurance. While in whole life policies and option B of universal life insurance this is paid together with the face value after the death of the insured, with option A of universal life insurance the cash value is not paid.

Ways to collect cash value

The cash value of universal life insurance can be collected in two ways:

Option A

After the death of the insured, the cash value in the account will be used as part of the universal life policy set out in the contract. The rest of the amount will be paid by the same insurer.

For example, if you have agreed to a universal life policy for an amount of 70 thousand dollars and you have 30 thousand available in the cash-value account, after your death the insurer will only pay 40 thousand. The rest will be paid directly from your cash value.

Option B

In this case, after the death of the insured, the amount found in the cash value account will be added to the face value of the policy.

For example, if the face value of your universal life insurance is 70,000 dollars and you have 30,000 dollars in your cash value account, after your death the beneficiaries will receive 100,000 dollars.

See what criteria to adopt to choose your life insurance

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See what criteria to adopt to choose your life insurance

All coverages have exclusions and specific conditions that you must carefully analyze.

To purchase life insurance, you must assess your real needs so as not to hire complementary coverage that will not be used. It is a survey that takes time, moves emotions, because nobody, in fact, would like to use this insurance.

But it is important to do so even so as not to underestimate the financial needs of you or your dependents if they can no longer count on your support. It is good to remember that all coverages have exclusions and specific conditions that you must carefully analyze. If the insured is a self-employed professional, for example, it may be important to hire coverage known as the Temporary Disability Rate (DIT), which guarantees payment of the contracted rate for the period when he is unable to work due to sick leave or covered accident for insurance.

The main one, which is mandatory, is death coverage, which will pay the insured capital (indemnity) defined in the policy to the beneficiaries, in the event of the death of the insured (natural or accidental).

The life insurance structure can distinguish between basic and additional coverages, and the insurance must contain at least one of the basic coverages (natural or accidental death). However, instead of approving insurance plans with basic and additional coverage, many insurers have chosen to offer independent insurance plans for each coverage.

Thus, it is possible to contract an insurance plan only for death coverage (natural or accidental), only for accidental death, just for accident disability, only for functional disability due to illness, only for work disability due to illness, etc. It is very important that all situations that you want to be compensated to your beneficiaries are clearly provided for in the contract you sign with the insurer.

The most common coverages are:

• Death
• Accidental death
• Total or partial permanent disability due to an accident
• Total permanent disability due to an accident
• Major permanent disability due to an accident
• Total permanent functional disability due to illness
• Total permanent working disability for Illness
• Medical, Hospital and Dental Expenses
• Temporary Disability
Fees • Hospital Admission
Fees • Serious Diseases

Based on the combination of these coverings, there are specific products, among which insurance: credit life, education, travel, housing, and endowment stand out.

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5 reasons to buy life insurance