Life insurance is contracted to alleviate the unfavorable economic impact that circumstances that affect the life of a person can produce. For example, a person can subscribe to life insurance so that, if he dies, his children will not have financial problems; or a worker accepts to retirement insurance so that when he retires his total income will not decrease. There are three basic types:
- Coverage for survival case: in exchange for the collection of a premium the insurer is obliged to pay a certain amount (insured sum) if the sheltered lives on the date set in the contract.
- Insurance in case of death: in exchange for the collection of a premium, the insurer is obliged, in case of death of the insured, to pay the beneficiary a certain amount (sum insured).
- Mixed insurances: they combine, in a single contract, a benefit for death and another case for survival.
Among the variables with the most significant influence on the price of the insurance (premium) can be cited the age, the state of health of the insured and his profession. The people who represent the most significant risk, such as people, who smoke, those who have dangerous jobs or those who practice risky sports, pay premiums that are higher than the average.
When a person contracts life insurance, the insurer in the initial moment must perform a risk assessment, which usually consists of subjecting the person who hires the coverage to a questionnaire about their health. Regarding the answers to this survey, it is essential to highlight the importance of what is stated in it, since if it is inaccurately answered or data is omitted, the insurer, in the event of the contingency, may even be exempted from paying the benefit if he mediated fraud or severe fault in the statement. Also, on some occasions, the insurer requires the performance of a medical examination before the signing of the insurance contract. Within life insurance, special mention should be made of the following modalities:
They are life insurance in which the policyholder assumes the risk of the investment.
The final yield (positive or negative) inherent in this insurance derives from the fact that the premium is invested in investment funds and securities that the insured chooses among those offered by the insurer. The policyholder can change the guards or the investment fund associated with their policy.
The subscription of this type of product entails risks since, in case of adverse yields of the values in which the premium is invested, the losses are assumed entirely by the policyholder. Therefore, when choosing the investment, the level of risk that the policyholder is willing to consider must be taken into account, and past profitability does not ensure future profitability.
The retirement insurance
Retirement insurance is mixed life insurance (that is, it combines a benefit in the event of death and another in case of survival) that are intended to constitute a long-term insured capital through the payment of periodic premiums. The benefit can be received in the form of money, temporary rent or annuity.
In this type of product, there are no limits regarding the amount of the premiums, and they can enjoy full liquidity, generally starting from two years, if it is foreseen in the contract, although the insurers penalize for the anticipated disinvestment (rescue) of these products. Do not wait until the legal age of retirement, to be able to exercise the right of relief.