5 Tips for Hiring Your Life Insurance
Although often neglected, life insurance should be part of any financial planning. After all, how can there be a plan that in ten minutes can go downhill? To demystify the main questions that surround the theme, see how and when to hire the type of protection best adapted to your needs.
1. When is life insurance worth it?
Insurance serves to restore a loss to people who are financially dependent on you. For those who are young, single, have no children and parents do not depend on their livelihood, the greatest risk is an accident that prevents you from continuing to work and keep your bills up to date. In this case, only partial and total disability insurance should be contracted, which is cheaper than death insurance. From the moment that there are spouses and children especially while they have not yet finished college, more full insurance becomes meaningful, after all, you do not want them to pass need in your absence, right? The tip is to update the policies according to the moment of life. As their wealth increases and their children work, the family is no longer totally helpless in the event of a fatality. Thus, with the passage of the years, it is possible to decrease the value of coverage or even to divide it better among the dependents.
2. Is it worth having a different policy for each situation?
Traditional insurance offers coverage by death (natural and by accident) or permanent disability (total or partial) caused by accident. Currently, there are additional modalities that protect against the temporary impossibility of exercising the profession and even indemnifications in the case of serious illness. All the protections can be combined with the same policy, but some insurers limit the coverages between 1 and 2 million reais. If you can afford it, a person can have as many policies as he wants and receive the value of all of them. It’s the only cumulative insurance case. He says that professionals who are content only with company-run life insurance, which is usually restricted to only 12 or 24 salaries, should be on the alert. Insurance linked to the credit card, capitalization or private pension alone is usually not enough either.
3. How is the ideal value of the coverage calculated?
By adding up the expenses of your dependents (and projecting future costs for small children) and setting a deadline that would be required to cover these costs in your absence. Insurance does not serve to secure a permanent income but to enable the family to reestablish itself. For those who have already developed up enough equity to ensure the family’s standard in the case of unforeseen circumstances, life insurance is not as necessary. The exception is when insurance becomes an inheritance instrument. It’s a clever way of leaving a particular value to someone and specifying how it’s going to be distributed without giving way to contestation. What the indemnity does not go into inventory is released in a few days, does not respond for debt and is exempt from taxes.
4. If nothing happens to me do, I lose the money invested?
In most cases, yes. Even if you give up the contract halfway, or the opposite if you have paid for many years. Life Insurance is not an investment. It works like a car insurance, meaning you only have to pay to be insured if the accident happens. An alternative is to take out a redeemable insurance, when the insured can get a share or the total of what paid, with monetary adjustment, with or without interest, if it survives until the end of the stipulated term. This protection is still very expensive in the country and usually does not pay. Better to take this money and apply to supplementary pension funds or other investments.
5. In which cases is the insurer not required to pay the premium?
There are several complaints against insurers that refuse to make payment in cases of accidents, alleging pre-existing illness and omitted at the time of signing the contract. In some cases, the insurer may also claim that the client has aggravated the risk of the accident on his own. It is up to the insurer to confirm that its claims are correct and it is up to the insured to notify the insurer whenever their lifestyle changes. If you put in the questionnaire that you are a quiet person, you do not do extreme sports, but if the next week you buy a motorbike and go out practicing motorbike, it will be clear that you acted in bad faith or at least collaborated to increase your life risk. And in the case of default, even if the delay is for a few days and all the previous installments have been paid on the due dates, the law allows the insurer to suspend the premium or even cancel the insurance.