Why Is Life Insurance Important? Understand How It Works

Why Is Life Insurance Important.  Increasingly sought after, life insurance offers a series of benefits that bring more quality of life and tranquility to the insured and his family. Nobody likes to imagine the possibility that a fatality can happen at any moment, but as they say, the best thing is to be prepared, in this sense, life insurance is important.

In this sense, taking out life insurance is important for planning and organizing your financial life . With that in mind, we prepared this complete content explaining the real importance of hiring life insurance and how it works. Keep reading and check it out!

What is life insurance?

Life insurance is a contract between an insurer and an insured in which the contractor is guaranteed compensation in the event of a claim, which may be events such as death, illness, accident or disability . We are exposed to different risks every day and the idea of ​​life insurance is precisely to provide support and avoid greater losses in the event of fatalities.

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Why is life insurance important?

Many people still associate life insurance with death, but the truth is that insurance is important in fulfilling the objective of providing financial protection for the insured and their dependents. This insurance helps in the restructuring of family life in cases of accident, avoiding financial setbacks. This minimizes worries in difficult times.

Financial planning and wealth protection

Life insurance protection means that, in the event of an eventuality, the contractor and his family or dependents do not have to dispose of their assets, are able to afford their day-to-day needs and that their future plans are not compromised.

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Guarantees to the Insured

The guarantees of an insurance are expressed in the contract through the coverage, which are the possible events that give the right to compensation. In general, this insurance offers coverage in the event of the death of the holder, the other coverage may vary according to the insurer and the contracted modality.

In addition to the death of the holder, life insurance may include coverage against events such as:

  • accidental disability; funeral assistance;
  • medical-hospital expenses;
  • serious illnesses, among other situations.

Thus, as long as the event is provided for in the policy, its occurrence will be covered by the insurance, thus providing the indemnity.

Cost benefit

The value of the policy will depend on several factors, such as the age of the insured, types of risks, coverage, etc. However, if you think about the benefits that insurance has, you will conclude that it is very worth investing a certain amount to have peace of mind in the day to day of knowing that if something happens, you will be supported.

How does life insurance work?

Insurance works like other types of insurance. Normally, the holder chooses the insurance company, makes the insurance simulation according to his needs, chooses an amount for the insurance coverage. After agreeing with the contract, where all insurance coverage and rules are specified, the contract is made.

A certain amount must be paid to the insurer to be entitled to compensation and this amount will depend on the profile of the holder and the coverage chosen. When one of the covered events happens, the holder can trigger the insurance requesting compensation. In the case of death or disability, it is the beneficiaries who must activate the insurance and receive payment.

The basic coverage of life insurance is the risk of death of the policyholder for any cause: natural death, illness, accident, etc. There are other risks that could cause disability or death due to causes that are not usually included in a basic policy, so it is essential that the person who is going to take out life insurance think carefully about the situations to which they are exposed in their day to day.

Life insurance coverage is limited to that contracted by the policyholder himself, however, there are a number of circumstances that these products do not contemplate within the coverage and guarantees.

Suicide is one of the situations that are not covered by life insurance. Likewise, gross negligence or reckless acts are penalized. An example would be that of a person who dies due to driving under the ingestion of narcotics.

Other situations in which the insured company would not pay the agreed amount if the insured dies would be:

  • Acts involving military or civil confrontations.
  • Sports with a certain degree of risk such as car racing or mountain climbing.
  • Accidents caused by natural phenomena such as volcanic eruptions, earthquakes or floods.
  • Death caused by a beneficiary intentionally.

Non-traumatic pathologies (strokes or heart attacks), not paying premiums up to date or not having declared a health problem at the time of filling out the questionnaire, are other reasons why the insurer could refuse to pay compensation to the beneficiaries of the insurance. policy.

At Allianz we offer our clients different life insurance policies that cover different types of risks.
It is the fundamental life policy. It mainly covers death and burial expenses. It is ideal for people looking to protect their children or dependents in the event of death.
In addition to covering death, it also includes absolute permanent disability to guarantee the quality of life of the insured person if he becomes unable to work and generate income.
It is the one indicated to cover accidents. Although the most basic coverage is the death of the holder, it allows you to opt for other guarantees that cover death due to accident or serious illness.
It is the most complete policy that protects the insured against serious illnesses. Among other services, it offers a second medical opinion and health guidance 24 hours a day.
It is the modality indicated for the self-employed or professionals with highly qualified jobs. It covers death, absolute permanent disability and total permanent disability. It also offers family help for orphans or illness.
The most complete coverage and guarantees are offered by this insurance. It covers serious illness, death, death due to accident, death due to traffic accident, disability due to accident, disability due to traffic accident and absolute permanent disability.
In the event that in the future you cannot meet the mortgage obligations contracted with a bank due to death or disability, this type of policy ensures the economic stability of your relatives, since it covers mortgage loans and personal loans.

Each company has different life insurance.

Regardless of which one you plan to choose, we recommend that you take into account the coverage of your insurance, but especially the clauses, since not having them clearly can lead you to contract additional coverage.

But is it worth taking out life insurance?

Is it worth investing in life insurance or not? The main objective is to ensure that the owner, their family members or dependents have more security and tranquility on a daily basis, being able to count on financial support in the event of the death of the contractor or serious or permanent health problems.

Why Is Life Insurance Important, So the answer to the question is yes, it is worth investing in good life insurance. Just don’t forget that it’s essential to choose the insurance that’s right for you, one that fits in your pocket and meets your needs.

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