Life insurance serves to protect loved ones and themselves from events that could significantly affect the financial stability of a family unit.
What is life insurance?
Life insurance is an insurance contract that involves the following actors:
Insurance company ;
contracting party , the person who enters into a contract with the insurance company and pays the related premium;
insured , the person on whose life the insurance is taken out, and who may or may not coincide with the policyholder, since the policy can be stipulated on his own life or that of a third party (with the written consent of the latter) ;
beneficiary , the person who will obtain a capital or an annuity in the cases provided for by the insurance contract.
The beneficiary or beneficiaries can be appointed at the time of signing the contract, or with subsequent written communication to the insurance company, or by will, and can be modified at a later stage, in the same way.
Typically, a life insurance policy is taken out to offer beneficiaries financial protection in the event that the policyholder:
becomes seriously ill;
When signing the policy, it is necessary to provide information and make choices :
details of the policyholder, the insured and the beneficiary;
type of coverage (which we will see later);
capital you want to insure;
how to pay the premium;
duration of the policy.
What are the coverage of life insurance
The coverages are of different types and concern the life, death or disability of the insured.
Let’s see in detail the most used types of coverage , considering that for each it is also possible to subscribe a series of complementary insurance with which to integrate the basic protection formula:
accident insurance ;
critical illness insurance ;
disability insurance .
Temporary death insurance (TCM)
Provides protection for beneficiaries in the event of the insured’s premature death and is the most widely used coverage. If this happens, the beneficiaries get a lump sum.
For this type of coverage it is necessary to define the duration of the policy , that is the period in which you want to have coverage according to the needs and family commitments, especially in single-income families.
An example is the duration set for the entire period of study of the children in order to ensure adequate financial coverage in case of need.
Temporary death insurance belongs to the category of pure risk life insurance as if the policyholder is alive at maturity, the contract is terminated and the premiums paid are not refunded.
In this case it is a form of saving for the future of the policyholder or of one or more beneficiaries designated by him , which accumulates a capital on the policy which is then collected at the expiry date set by the contract, if the insured is alive.
If, on the other hand, the insured dies before the expiry date, the contract is terminated and the premiums paid are not refunded.
Mixed life policies
A combination of the two covers seen so far. This type of policy protects the beneficiaries by guaranteeing a capital both in the event of the death of the insured and if he is still alive at the pre-established expiry date .
Additionally, this coverage may include other events such as incapacity for work, disability or injury.
Why choose a life insurance policy?
Therefore, life policies are essential to be placed at the top of your list of savings objectives, especially for single-income families.
The only income earner is the most financially important person in the family unit and therefore his premature death, disability or serious illness, can put the other subjects of the family in serious crisis, first of all the minor children .
How much does a life insurance cost?
The cost of life insurance varies depending on a few factors :
type of coverage chosen;
amount you want to insure;
age of the insured;
duration of coverage.
Before signing the policy, the policyholder must provide the Company with a series of information that will be used to determine the risk :
state of health of the insured person;
lifestyle, for example if you are a smoker or not.
The Company must, in fact, know if the person in question leads a life that more or less exposes him to risks. The risk may then have to be recalculated, as well as the premium, whenever significant changes occur in the life of the insured , such as the practice of new dangerous sports activities.
In the event of false declarations, the Company has the right to refuse payment of the service.
To find out what the amount you should pay to meet your needs, access our life budget .
Practical and fiscal benefits of life insurance policies
Taking out a life insurance policy guarantees a series of practical and fiscal benefits .
it is possible to freely choose the beneficiaries , even outside the estate;
guarantees impenetrable and unequivocal services within the limits of the law, exempt from IRPEF if paid to individuals (and not to companies) and which, not being part of the inheritance, are not subject to inheritance tax;
it entails immediate tax advantages thanks to the deductibility, within the limits of the law, of the premium paid for pure risk coverage from personal income taxes (IRPEF).