The goals and objectives of various categories of citizens who need life insurance may be different. They are as follows:
1. Tourists: if you plan to go abroad to a country with a visa regime, having a life insurance policy may be a mandatory condition, without which you will not be given a visa. Such a policy can help cover medical expenses abroad or repatriation of the body in the event of death;
2. The mortgage holder: if an insured event occurs, the insurer will have to pay the bank the missing amount. Besides, having an insurance policy can help reduce the mortgage rate;
3. Source of passive income: many life insurance contracts offer a guaranteed return, which can be a good help in everyday life. Plus such programs have preferential taxation; they cannot be withdrawn or divided even through court. Another important bonus here is a 13% tax deduction if the contract term is over 5 years. It is possible to receive these funds throughout the entire term of the contract, annually.
4. Those who are trying to save money: this type of insurance is called endowment; with its help the capital for a large purchase or education of the younger generation can be formed.
5. Those who want to have a financial guarantee: any type of insurance gives confidence in the material well-being of you, your family and loved ones.
There are several types of insurance programs, and most of them can be supplemented with various functions or practically combined with each other, thus receiving an individual product customized only for your needs.
Endowment
Endowment is designed to allow the insured to accumulate the money they need over a certain period of time.
The premiums in this case will depend on the size of coverage amount and contract term. This type of insurance can be an alternative to bank deposit as a way of accumulating capital. In addition to the insurance component, endowment implies receiving an extra (in many programs, fixed) return. And if the program has an option for exemption from paying insurance premiums, when an insured event occurs, the insurer will be obliged to pay the insurance premium instead of the insured, and as a result, the coverage amount will be paid in full.
Another pro of concluding an endowment agreement is that in the event of the insured’s death, the beneficiary specified in the contract (this specific person can be anyone, not necessarily a relative of the deceased) will receive the entire insurance benefit.
Investment life insurance or ILI
This type of insurance is usually chosen in order to be able to receive investment return depending on the growth of the selected asset, without losing your own funds in the event of its negative dynamics.
If something happens to the insured during the program period, additional payments may be provided. However, the range of risks that can be included here is usually lower than in the savings program.
Please note that with investment life insurance, the insurance company does not guarantee the return on investment; the choice of how much funds the insurer invests in is made by the client at the time of concluding the contract.
Insurance for a mortgage or loan
According to the law, when buying real estate with a mortgage, the borrower (an individual) is obliged to insure the property. However, banks often require life insurance as well, this is necessary so that in the event of any unforeseen circumstances related to the life and health of the borrower, the loan is fully repaid at the expense of insurance company. If life insurance policy is not issued, the bank may increase the interest rate on the loan.
Differences between different insurance agreements
Insurance programs have their own characteristics and differ from each other in several following factors:
● Term of the contract will depend on its type - for example, a risk policy can be valid for a month, 90 days, 180 days or a year, while savings and investment policies are most often concluded for more than 5 years.
● Duration of the insurance coverage can last until the end of the contract or until an insured event occurs.
● Frequency of payments is usually initially specified in the insurance contract (one-time, lifetime or regular).
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