Life takes many turns. Although today a person enjoys health and economic security to cover their needs and that of their families, the situation can change from one day to the next. An example of this has been the covid-19 pandemic. Therefore, having life insurance is convenient to ensure the future, becoming an essential support for families and for the insured themselves. These are the advantages:
The purpose of life insurance: to protect the future
It is more than likely that, at some point in life, people wonder what would happen to their family or themselves if something happened to them. With life insurance, the answer is known in advance: there would be a certain income to guarantee the quality of life. And it is that the main function of life insurance is to protect individuals against a possible adverse situation caused by the death or absolute permanent disability of the insured, providing economic stability to the family.
In fact, according to data from the Spanish Union of Insurance and Reinsurance Entities (Unespa), every year a third of the deceased between 41 and 50 years of age in Spain is protected with this type of insurance.
That is to say, in the most difficult moments, this type of protection can become one of the main aids for many households, since “it offers the peace of mind of knowing that no matter what happens, a family will be able to maintain the usual standard of living for a time to readapt to the new situation”, explains José Manuel Veiga, director of Protection Insurance at BanSabadell Seguros.
Become relevant in the most important moments of life
The basic coverage of life insurance is the death of the insured, a fatal circumstance in which having contracted a product of these characteristics acquires special relevance. Especially for those families with a high economic dependence, or even total, of the insured person.
In these situations, the beneficiaries or the insured person would receive the amount previously set to cushion the economic impact caused by the absence or absolute permanent disability of the insured person. For, as has already been mentioned, to face the payment of a mortgage or a loan.
In Spain, there are 3.8 million mortgaged people who have life insurance, according to the report Fatality, at the worst time. Life insurance benefits related to mortgages, from the Unespa initiative, Somos Seguros. These people can be calmer knowing that their relatives and they will not have problems to face the payment of this debt, no matter what happens.
It pays to take out life insurance
Many people wonder if it is really necessary to assume another expense to those that they already have regularly and take out life insurance, since it is voluntary. However, experts emphasize that it is a type of insurance that is especially relevant in the most transcendental moments and with the essential utility of shielding the economic needs of the family and oneself if something happens.
“We must bear in mind that, on average, it takes about five years for a family to recover economically after the loss of one of its members, and in this type of possible situation we should all think about protecting our own,” he says. Go.
How much does it cost to take out life insurance? The average annual investment is 600 euros per person and policy, according to data from Unespa, well below the more than 1,200 euros allocated by other European countries.
Official figures state that, each year, nearly 70,000 Spanish families are beneficiaries of this type of policy, with an average benefit of 45,000 euros. This amount allows liquidating around 4,700 mortgages annually, according to the aforementioned report from Somos Seguros, and exceeding 166 million euros in total.
Another series of coverages
Life insurance not only covers in case of death, it is also very useful to improve the economic well-being of the insured themselves and their families. The reason is that it protects them against equally unforeseen events, including absolute permanent disability.
“The main coverage of any life insurance is death, but it is just as important to have absolute permanent disability coverage. In this situation, the insured person will not be able to carry out any paid work and may also involve certain expenses such as medical expenses or have an amount to compensate for the decrease in income due to having to stop working for a time”, explains the BanSabadell Seguros expert .
But there are more cases in which life insurance proves its importance, since there is also another series of very interesting complementary coverages according to the specific needs of each person. This type of insurance offers the possibility of requesting an advance of the capital if you suffer from a serious illness, such as breast cancer. A money that helps the insured to pay for medical treatments that they might not otherwise be able to afford.
To encourage the contracting of life insurance in Spain “the tax deduction should be promot. In addition, benefits for death and disability should be more discounted at the tax level for inheritance tax and personal income tax (IRPF), respectively”, claims the BanSabadell Seguros expert, since it is currently not possible benefit from a reduction in the personal income tax base for the payment of premiums.
However, although insufficient, there are some cases in which you can enjoy certain tax advantages. For example, if the policy is link to a mortgage, it is allow to deduct up to 15% of what is destine for the purchase of a home on a maximum basis of 9,040 euros, although, yes, the acquisition must have been make before 1 January 2013. As for self-employed workers, they can include the insurance payment in their income tax return up to a maximum of 500 euros if the policyholder and the beneficiary are the same person.