All Types of Life Insuranceby Admin | August 23, 2021
When you buy individual life insurance, you are looking for peace of mind knowing that your loved ones will be protected and will receive financial support in case something happens to you. Before buying one of these policies, you should find out which one best suits your needs. There are different types of life insurance policies depending on their purpose and characteristics. Knowing how to differentiate between these types is essential for choosing the right policy.
What are the differences between life and non-life insurance?
Within the insurance sector, there are two main groups that encompass the different types of policies according to their coverage and objectives: Life insurance and non-life insurance.
Definition of life insurance
Life insurance is a personal insurance product that provides financial protection to the beneficiary in the event of death or temporary disability of the insured. In other words, it is a policy that a person takes out to guarantee financial support to his loved ones when he is no longer able to do so, either because he has died or is unable to continue working.
Personal insurance: protects the insured person from events that occur directly to him/her, such as accident or health insurance. Damage or property insurance: these cover eventualities affecting the insured's property. These policies offer compensation when one of the events stipulated in the contract occurs. Here we find property insurance (covers the loss of material goods) and liability insurance (protects against civil liability). Some examples are car insurance, fire insurance, theft insurance, or home insurance, among others.
Service provision insurance: These offer different services in the event of the occurrence of any of the events agreed in the contract. Within this type we find death insurance, legal assistance insurance or travel assistance insurance, among others.
Types of individual life insurance policies
There are different types of life insurance that you can take out depending on the objective you wish to achieve. Thus, the main distinction that can be made is between insurance policies that protect your loved ones by covering the death or disability of the policyholder, and those that seek to save the insured.
Risk life insurance
Also known as death insurance, life insurance policies are designed to cover the death or total disability of the insured, granting the beneficiary the capital stipulated in the policy when one of these events occurs. Therefore, in this type of policy the insured and the beneficiary are not the same person.
Temporary life insurance
This type of insurance covers the risk of premature death before the end of the contract. If the insured does not suffer any of the covered damages during that time, the insurer will not have to pay the indemnity and the money will not be recovered. This type of policy is usually taken out for the repayment of a loan and its duration is renewable.
Whole life insurance
The coverage in this type of insurance is permanent, for the entire life of the insured and without terms. The indemnity is paid immediately after the death of the insured, regardless of the time of death. In this case, premiums can also be of two types:
Lifetime premiums: they will be paid for the entire life of the insured.
Temporary premiums: paid only for a few years.
Life savings insurance or survival insurance
Life savings insurance is also known as life insurance or survival or retirement insurance. In this type of policy, the beneficiary is usually the policyholder who will receive the capital at the end of the contract. Its purpose is to make a medium or long-term investment to supplement retirement benefits or to meet possible future disbursements.
Survivorship insurance savings insurance
This product offers quite low interest rates if compared to other savings products, has no risk and is not taxed on the profitability, only on the collection of the policy.