Among the most widespread forms of livelihood protection is the conclusion of a life insurance policy. Even if a good income and perhaps inherited assets are available, the economic future is highly uncertain: a serious illness or accident can quickly become an existential threat. Life insurance covers two possibilities: On the one hand, the death of the insured during the insurance period(death event), on the other hand, the survival of a certain point in time(survival event). This covers two important aspects of supply. Both in the event of premature death and when the agreed end of the insurance is reached, which is usually the start of the annuity, the policyholder or his survivors receive financial protection.
Protection of family and property: for whom it makes sense? Absolutely important for whom?
About the conclusion of life insurance should think in time. An early insurance start is favorable if one is still relatively young. Then, as a rule, there are no health risks that could drive up the insurance premium. Absolutely necessary is a financial protection for young families. With young children, a sole earner and a home loan, emergency coverage is absolutely essential. With a life insurance one provides for the emergency. Paying off the mortgage on the family home and the education costs for the children should be covered by a life insurance policy. Before taking out a life insurance policy, there are important decisions to be made.
Endowment life insurance or term life insurance? What costs are covered by the insurance?
The endowment life insurance is suitable for saving a contractually agreed sum insured at a certain point in time. This secures the payment of a fixed sum at an agreed time. Mostly, this insurance serves to have a further financial cushion available in old age possible is also a monthly payout. This type of life insurance serves, among other things, as a risk-free and long-term capital investment.
The second, widespread form is a term life insurance policy.
This is an insurance policy that becomes due in the event of the death of one or more policyholders.
A benefit in a certain amount is agreed upon the death of the insured person. The amount of the benefit payment as well as the term are individually treatable. The term is based on the duration of a home loan, for example. Term and sum insured are two components in calculating the premium. If there are no major health problems, there are also favorable premiums. However, the premium will be more expensive for smokers and lovers of extreme sports. Some insurance companies will not pay for suicide or within a lock-up period.
In addition to paying off a loan, term life insurance can also be used to cover funeral expenses in the sense of death benefit insurance, or to pay any applicable death taxes.
In addition to the advantage of the low premium, however, there are also serious disadvantages: If the contract period ends before the death of the insured, there is no payout at all. Especially with whole life term life insurance, this then results in an overpayment.
Therefore, a combination of life insurance on death and survival is also popular
In this case, the contract specifies that a certain amount is payable upon the death of the policyholder. Beneficiaries are included in the contract. Insurance benefits are usually paid to the surviving spouse or children. Partial payout insurance is also possible. A portion of the sum assured is then paid out for another 10, 20 or 30 years. In the event of death, a contractually agreed sum is payable. This can be either the full amount insured or the benefit reduced by the amount already paid out through payouts. The combined form of life insurance is extremely popular. On the one hand, it serves to provide financial security for families, and on the other hand, it allows for some capital accumulation. In addition, unlike term life insurance alone, this combination does not lose premium payments.