Life insurance is increasingly being taken out and gives you or your next of kin more security for the future. It can take away a lot of worries and often gives you more financial security. There are special insurance policies that are paid in case of death, but also insurances that you can already use for death. But why would you take out a life insurance policy? And what is the difference with the various species? We will gladly tell you more about this in this article or a personal consultation. You can request this free of charge via the contact form.
Why take out a life insurance policy?
Many people wonder why they should take out a life insurance policy. We are happy to explain a number of reasons for you:
Everyone runs financial risks, for example, a sudden death or unexpected costs you incur. For those types of financial risks, a life insurance policy can offer a solution.
Repayment of your mortgage
A mortgage has to be repaid at a given moment. With a life insurance policy you can be sure that you can repay all or part of the debt at the end date of the mortgage.
Leaving your survivors well
In the event of a death, a financial gap often arises for the next of kin by, among other things, a loss of income. A life insurance policy can ensure that this gap is reduced or even completely closed so that your relatives have slightly less worries.
Saving for future expenses
A life insurance policy can also be used to save on future expenses that you or your survivors may have. Consider, for example, children who want to study in the future or other expenses that you expect to receive in the future.
Many people take out a life insurance policy in order to fully enjoy their old age. So you always have a buffer for when your pension is disappointing.
What types of life insurance policies are there?
There are various types of life insurance policies that can be divided in different ways and types. For example, the moment of payment, type of benefit and the degree of certainty can be examined.
When will Payment be Made?
When we look at the moment of payment, 4 types of life insurance can be distinguished. One insurance only expires on death another does this on a fixed date and there are also insurance policies that distribute it.
1. Savings insurance
With a savings insurance policy, the insurance will expire on an agreed date. A condition for this is that the insured person is still alive. If the insured person dies earlier, this life insurance will lapse and no benefit will be paid.
2. Term life insurance
In case of a term life insurance policy, payment is made when the insured dies before the end date of the insurance. A term life insurance policy with data is also referred to as the temporary term life insurance. There is also a variant where you are insured for life, this is called the lifelong death insurance which also results in death.
3. Mixed insurance
With mixed life insurance you have a combination of savings and term life insurance. With this insurance you always receive payment. Often this benefit is on the end date if the insured person is alive. If the insured person dies before the end date, the insurance will be paid out at that time. If you have a good mixed insurance, the insured amount at the end date is equal to that of the insured amount at death before the end date. Sometimes there is a difference in this can be found in the conditions of your life insurance.
4. Insurance with a fixed term
With this life insurance you agree on a fixed term in advance. If this term is provided, payment will be made. Even if the insured person has died, payment is made on the agreed date. When the insured is deceased, no premium is owed. The insurer then saves further and pays the agreed amount on the end date that is noted in the policy. An example of a fixed term insurance is the study insurance.
5. Two Types of Benefits
Life insurance policies can be classified according to the type of benefit. There are then two types of insurance:
- Capital insurance: This is a life insurance policy whereby you pay an amount in one go. Examples include: a funeral insurance or an annuity of capital insurance .
- Interest insurance: With an interest rate insurance policy, an amount is paid periodically, usually per month or year. Examples are: annuity insurance and a golden handshake settlement.
According to LifeNetInsurance (https://www.lifenetinsurance.com), another component where a life insurance policy can be divided is the degree of certainty. Here you can also distinguish 2 life insurance policies:
1. Traditional insurance
The insurer will pay a fixed interest on the contributions paid in. These interest rates are fixed for the entire term in most cases. During the closing you agree on the amount that will be paid out. That amount can also never be lowered. However, there is a possibility that this amount will increase if the insurer distributes the profit, these profit sharing is not fixed.
2. Investment insurance
With this life insurance policy, the premiums invested are invested in various investment funds. You can usually decide for yourself what funds are invested in. Investing does involve risk because the distribution depends on the value of underlying investments. You never know how high the benefit will be. These are often seen as a usury policy and must be quickly reclaimed by one of our advisers.