Life insurance: main types and key aspects
Life insurance is a personal insurance that allows to receive a material compensation in case of unforeseen events such as accidents, illness or death of an insured person.
All expenses will be compensated by the insurance company, so in some cases life insurance can be considered as a good way to increase an income.
Life insurance consists of 2 groups: classic life insurance and endowment or mixed life insurance.
1) Classic life insurance (also known as "classic risk insurance") refers to simple insurance policies against an accident (death or disability) or any other specific event determined by an insurance contract. Classic insurance contract is concluded for a year.
A client pays the cost of an insurance policy in a single payment. In case if an insured event happens, the insured person or family members receive determined compensation, agreed in the contract. This type of insurance contracts has a disadvantage: if the insured event does not happen, the annual payment made by the client disappears and will not be added to the client's accumulated contribution.
2) Endowment insurance differs from the classic risk insurance in terms of how the total client's fund is calculated. It secures you in case of tragic events as well, but also it provides an opportunity to accumulate a certain amount of money year by year and increase the total amount of your insurance compensation. This product is something between a deposit and an insurance contract. This type of insurance policy can be used to collect money and spend it on a real estate, education of your children or as a retirement fund.
The endowment insurance contract is usually signed for 10 years and longer. A client systematically makes regular payments ("premiums"). Usually it happens once in a month or once in three months. A value of these insurance payments is calculated depending on the amount of the insurance coverage, term, age, profession of the client and other factors. When a contract ends or if an insured event happens, the insurance company fully pays the agreed amount of money to the beneficiary (private person or a legal entity).
The endowment insurance has several advantages:
- payments within endowment insurance policies are untaxed;
- in case of death (if it is determined in the contract as an insured event) the payment will be made directly to the beneficiary chosen by the insurant. So the general rules of inheritance law are not applied here;
- insurance payments can not be confiscated;
- in case of divorce the payments made by the insurance company will not be divided between spouses (even if the contract was signed in marriage).
As we can see here, endowment insurance is one of the easiest and relatively risk-free options to protect your future and wellness of your family. Statistic claims that more than 70% of people in Western Europe use this type of insurance and provide themselves financial stability and financial security to their beloved ones.
Life insurance in Cyprus is not so popular as it is in the rest of Europe. It is used to conclude mortgage loans and other credit contracts more often than to provide a financial base of children's education and their adult life in the future.
Pitsas Insurances proposes to their clients the easiest and most profitable insurance packages, being focused on their goals, needs and financial opportunities.
If you wish to receive an offer for your life insurance follow the link Life Insurance.