May 06

Life Insurance: The Basics

The role of life insurance is to cover risks associated directly to the insured person, either related to their existence (life insurance), either with respect to their physical or physiological (bodily injury insurance as accidents and / or diseases).

The basics of life insurance are:
1. Understanding life insurance.

Its basic mechanism can occur in two ways:

(A) To cover the risk of death, giving the insured to a third-party beneficiary in case of death of the insured;

(B) cover the risk of life, providing capital to the same insured, if expected to have reached a certain age (temporary).

Life insurance can be hired individually or collectively. The latter case is easily in business, well known insurance companies where the employer, making policyholder is responsible for hiring a group insurance for their workers.
2. Why hire life insurance?

Life insurance have great utility in our society. Basically, this contract allows the receipt of capital to protect our family financially.

This capital may also have a specific function, as in the case of property insurance, or to take care of medical expenses, including obsequies.

Life insurance may also pay off our mortgage debt and consumer credit

Forget that tendency to look at life insurance as only applicable in case of death as it may have different approaches and functions.

Today, you can subscribe to a life insurance policy in order to constitute a savings tool, for example to ensure better pension (life insurance savings).

We can also conceive of life insurance as an investment instrument, even with the possibility of early benefit of the insured (total or partial redemption). Like other financial instruments, the insured may be subject to different risks, increasing or decreasing the possibility of gain, which could even guarantee a minimum return.