There are several kinds of life insurance that you can contract in the market, each one of them with its specific singularities. A first classification is the one that distinguishes between whole life insurance, when the insured is covered for life, without there being, therefore, a deadline on which the insurer stops providing the service; and temporary life insurance, in which you subscribe to the policy for a certain time, which is during which you will be covered as an insured.
However, the most common classification is the one that attends to the type of coverage contracted, and that gives rise to three types of life insurance: risk life insurance, savings life insurance, and mixed life insurance.
How does life insurance work?
The operation of life insurance is very simple. It is based on the fact that the policyholder, who is the person who contracts it, pays a certain periodic fee to the insurance company, which in turn pays a certain amount of money (insured capital) to a third party, called the beneficiary, in event that the insured event occurs, which may be the death (or supervening disability) of the insured or the survival of the latter at the end of the time stipulated in the policy.
The amount of the periodic premium that you will have to pay when contracting this type of life insurance is variable and the way to calculate it depends on three fundamental factors: the age of the insured, his medical history at the time of contracting, and the total amount of capital you wish to insure. The payment of the premium is usually annual.
Types of life insurance
There are several types of life insurance policies that you have at your disposal, depending on whether you want to cover the death of the insured person (risk life insurance), their survival during the period that you agree with the insurer (savings life insurance) or a combination of both (mixed life insurance). Let’s take a closer look at each of them:
risk life insurance
The so-called risk life insurance is the most common type of life insurance on the market. This type of policy covers the death of the insured person, in such a way that when he dies, the designated beneficiary obtains the capital stipulated in the contract. Its objective is, therefore, to protect the beneficiary if the insured is absent.
However, you can also take out risk life insurance whose coverage is the invalidity or disability of the insured, which is very useful if you are self-employed or employed, as it allows you to obtain compensation if for such reasons of invalidity or incapacity you cannot continue to carry out your work.
savings life insurance
Savings life insurance, also called survival insurance, is one whose purpose is for the beneficiary to obtain a certain capital or certain income if the insured continues to live at the end of the term of the contract.
This type of life insurance can be very useful as a complement to retirement. It is common to contract it precisely by setting the insured person’s retirement date as the survival date.
mixed life insurance
It is a kind of hybrid insurance that combines, within the same contract, risk life insurance, and another saving. In this way, the client is covered in the event of death, although if he survives the age set in the contract, he may also benefit from the contracted benefits. Obviously, in the event of death, it will be the beneficiaries designated in the policy who will receive the agreed compensation.