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Do you know the life insurance market?

Do you know the life insurance market?

The life insurance market has existed in the USA since the empire, but there are still many doubts about its importance and the benefits it contemplates. The most common of these is to believe that life insurance only serves to financially protect the family in the event of the death of the insured. Do you know what the others are?

See below for 5 useful information about these products that still confuse the population.

1. Product is not used only in case of death

When it comes to life insurance, we automatically think of the cases in which the insured person dies. However, there are other options for broader protections against countless life hazards.

Imagine, for example, that a patient has been diagnosed with cancer. In addition to the health risk, the disease can compromise the insured’s and his family’s income. Therefore, there are several products available on the market that include protection in case of serious illnesses.

There are other coverages, such as in the case of medical procedures, hospitalization, accidental disability, and anticipation of receipts in case of terminal illnesses. Some products are characterized by the constitution of a redemption value after a certain period of effectiveness of the policy. For these types of products, it is worth noting that the formation of redemption value is not to be confused with a private pension.

Life insurance can still be customized for different health profiles and lifestyles, such as different risk analysis for people in risk professions or hobbies. Therefore, it is important to know all the options and be sure about the ones that best suit your profile before signing the contract.

2. Life insurance does not equate to private pension or retirement

In the last few years, the life insurance category has become popular in which the insured can, at the end of the agreed period, redeem part of the amount constituted over the years even if the claim does not occur.

Contrary to what many people imagine, this redeemable life insurance should not be confused with a private pension, retirement, or any other type of investment. This is because the main objective of life insurance is the financial protection of the insured and the family in the event of a risk provided for in the insurance contract, different from the private pension plan, for example, in which the purpose is to build the necessary financial reserve to guarantee the quality of life during the retirement years.

3. Importance for young people and singles

It is common to think that life insurance is only useful for older people. But the reality is not so, since young people and singles can use life insurance in their own financial planning and that of their family. The numbers confirm that this segment is, in fact, growing.

Unforeseen events can occur at any time in our lives. Although less likely to develop serious illnesses or trigger a claim, it is important that people in this age group are also protected. Young people normally fall into a lower risk category, which reduces the premiums paid. But the more that decision is postponed, the greater the chance of any situation occurring that places the insured potential in a higher risk profile.

Likewise, singles and no dependents who plan to start a family in the future should also think about it and, if applicable, hire the product while prices are more attractive.

4. Affordable costs for different customer profiles

Asked why they did not take out life insurance, many would say it is because there are not enough financial resources to do so. What some people don’t know is that there are customized insurance options for each customer profile.

As with car insurance, a prior risk analysis is carried out, and the price can fluctuate according to numerous variables, such as age, compensation amount, healthy habits, family medical history, among others.

5. Business plan may not be enough

Many companies offer a corporate life insurance plan, but these products do not always fully meet customers’ needs. It is important to calculate whether, in the event of an event, the contracted plan will in fact offer the desired coverage. It is also relevant to read the terms of the contract carefully to see if, in the event of dismissal or job change, there will still be insurance coverage.

Since these products involve many features, including a number of optional benefits, it can be difficult to fit your needs into a particular group. To better meet the demands, it is possible that personalized life insurance is the most appropriate option.

Life insurance, private pension and investments: do not confuse these products

Life insurance, private pension and investments

They are important in financial planning, and their differences make them complementary

The Americans have increasingly understood the different products aimed at financial planning and its purposes, but there is still some confusion, for example, in the case of individual life insurance and private pension. Both are often seen as products that compete for the same space in financial planning, but in reality, they should be seen as complementary tools.

Both life insurance and private pension plans look to the long term, however, the similarities end there. Each has specific functions and benefits. The pension products aim at retirement, allow the choice between progressive or regressive tax regimes, and the reduction of the tax base by up to 12% – when the Income Tax (IR) is declared in full and contributions are made in the PGBL.

In addition, they use specially constituted investment funds, which do not incur quota-sharing, a semiannual collection of income tax expected in most conventional investment funds and which reduces profitability in the long run.

Individual life insurance, even the so-called redeemable ones, aims to protect the financial condition of the beneficiaries in the event of the insured’s early and unexpected absence, or the financial condition of the client himself, in situations that can transform his life, such as disability accident, serious illness, and even hospital admissions. Therefore, they are not and should not be confused with investment or social security.

Because of these characteristics, many experts recommend that people consider life insurance, pension plans, and investments as complementary products in their financial planning. Investment funds, therefore, are aimed at accumulating equity; private pension aims at a more comfortable retirement; Life insurance, in turn, is essential for succession purposes or to help the insured himself and his family to deal with possible problems along the way, such as early absences, serious illnesses, hospitalizations, or disability.

The amount accumulated in the funds of the pension products, through the contributions made and the profitability earned, will define retirement income, with no guarantee of value.

The indemnity of life insurance does not depend on the amount of installments paid or profitability, since, immediately after the policy is issued, protection considers the full amount contracted.

For example, even if the customer has only paid a portion of the insurance contract when a claim occurs, the beneficiary may receive the full amount contracted. That is, the product does not depend on accumulation and, after the first payment, the insured is already covered.

How does redeemable insurance work?

The redeemable insurance has a specific characteristic: it allows the insured to redeem an amount when necessary. However, when requesting the receipt of part of this amount, the protection amount is reduced, and, in cases where the entire available amount is accessed, the policy is automatically canceled.

This particularity of redeemable life insurance aims to give more flexibility to the insured, and should not be confused with the return of installments paid, profitability, or financial gains.

When hiring life insurance, it is important to provide all the health information requested in a complete and correct manner, in addition to carefully reading the general, special conditions, and terms of the policy to know the situations covered.

insurance or pension

A benefit for succession planning found in pension plans and life insurance is the fact that the death indemnity is exempt from income tax and the possibility to choose beneficiaries other than the legal heirs.

However, an exclusive benefit of life insurance is that it is not considered an inheritance; therefore, it is not subject to the Tax on Transmission Cause Mortis and Donation, called by many an inheritance tax. As the inventory process involves costs for the heirs, and, in many cases, can consume 15% to 20% of the total amount involved, it is normal to take out life insurance to cover these expenses and ensure the financial stability of the family during its resolution.

Online life insurance: we uncover myths of this type of insurance

Online life insurance

This type of insurance contract is an economical and quick option for those who want to protect themselves, but do not have much time

Those who understand the importance of being protected in case of unforeseen circumstances do not hesitate when looking for alternatives for this. And life insurance with online contracting offers the facility needed to enjoy life without worrying about eventualities.

This type of contract is a quick option for those who want to protect themselves, but do not have much time to go from insurer to insurer to make quotes, and are already in the habit of shopping over the internet.

If you also see an advantage in taking out life insurance online, check out the main myths on this subject.

Myth 1: purchasing insurance online is unreliable

This myth is directly linked to the scams we see on the internet today. The purchase tip is the same for any other product: be wary of very low prices and inaccurate information and choose companies with a name in the market and years of experience.

Few insurers and brokers have online contracts. Before companies in the insurance industry make this service available on the Internet, a whole study of information development and security is done. So, it is possible to make the quotation on the computer screen safely.

Myth 2: the broker must be in the same city of residence

Insurer support can be offered at any time and day. Today there are different types of service and sales channels that facilitate people’s daily lives, such as telephone, online chat, e-mail, Whatsapp, among others.

In any of these channels, life insurance specialists will be available to assist you and answer any questions about the life insurance coverage of your interest.

Myth 3: support in the physical space is better

The capital value is chosen by the insured person. Of course, there are some limitations to this, such as monthly income, age, type of coverage contracted, sex, profession, and health status.

What the insurer does is assess the risk. The higher the risk, the higher the monthly fee and this also influences the capital value.

Did you understand a little more about online life insurance? Many people pass on unsubstantiated information and end up spreading false news. So that you don’t fall into myths like these, our tip is to always seek clarification on the subject.

How does life insurance work? Check out 5 common questions

How does life insurance work

Check out some tips for those who want to buy life insurance.

How does life insurance work? How much? What guarantees does it offer? Is it the same as personal accident insurance? These and other questions are very common for those who want to buy this type of service. Check it out below.

1. What is life insurance and how does it work?

Life insurance is a contract made with an insurer to guarantee your financial security, as well as that of your dependents, at unexpected times.

You can choose the coverages that meet your demands, and also indicate who will be your beneficiaries – it can be more than one person.

But, after all, what is the amount paid to have these services available? The cost of life insurance may vary according to the coverage selected, depending on your goals and aspects such as age group, profession, sex, and habits of the insured.

Once the contract is made, the insurer is responsible for paying a previously established amount (indemnity) in case any of the accidents contracted in the policy happen.

In these situations, you or your beneficiary must contact the insurer and report what happened. The company will request the submission of the necessary documentation, which must go through an analysis and approval to then release the amount in question.

We remind you that it is very important to notify your loved ones where insurance documents, such as the policy, will be kept to facilitate the process.

2. What is the difference between life insurance and personal accident insurance?

Contrary to what many people think, life insurance is not the same as personal accident insurance. While the former gives the right to compensation in the case of natural death or illness, the latter, although it is more affordable, covers only cases of death or disability caused by accidents.

Some people see life insurance as something they will pay dearly for, but they will never be able to enjoy it, however, these are erroneous thoughts. This is because it can be used in life in specific cases, which we will discuss later.

What’s more, the cost can be much less than we usually pay to protect our car or apartment, for example – and maintaining the family’s quality of life should be a priority.

3. Why you should take out life insurance?

Many people do not include life insurance in their planning, as they do not find themselves facing any fatality. However, unforeseen events happen all the time and, therefore, prevention is always the best solution.

Buying life insurance aims to promote financial protection precisely in the event of some misfortune happening. Therefore, if you have a good quality of life and want to cherish the continuity of this standard, you should consider this option.

Therefore, taking out life insurance shows concern and appreciation for the family, as it guarantees the necessary resources for dependents in times of difficulty. Also, you can enjoy the benefits of life depending on the situation.

4. What are the guarantees for life insurance?

Life insurance guarantees vary according to the contracted plan. However, policies cover accidental or natural death and, in some cases, ensure protection for total or partial permanent disability due to an accident or serious illness.

In detail, when contracting insurance, the contractor and his dependents can have protection against:

  • death;
  • total or partial permanent disability by accident (IPA);
  • total permanent disability by accident (IPTA);
  • increased permanent disability due to accident (IPAM);
  • total permanent functional disability due to disease (IFPD);
  • total permanent disability due to illness (ILPD);
  • medical, hospital, and dental expenses (DMHO);
  • temporary disability benefits (DIT);
  • daily rates for hospitalization (IHL);
  • serious diseases (DG).

In cases of serious illness, a health plan covers only consultations, basic exams, and hospitalization. He does not pay for the patient’s transportation, special care, and necessary daily remedies.

These values ​​are high and can compromise the family’s financial situation. Thus, it is essential to have life insurance to ensure greater support in relation to these costs.

When buying this service, you receive financial aid for expenses in diagnosing Alzheimer’s, Stroke, cancer, acute myocardial infarction, chronic renal failure, and loss of hearing, speech, or vision.

Other coverages are for limb paralysis, bypass surgery, and heart, liver, marrow, pancreas, lung, or kidney transplants. In this way, moments of family insecurity are taken more easily.

One of the benefits for the insured is the additional indemnity in need of ICU admission. The daily rates are paid for clinical or surgical treatments caused by illness or accident, and which cannot be done at home, office, or clinic. With that, you can do the proper treatment without compromising your income.

5. How to take out life insurance?

To buy life insurance in line with your goals and needs, you must first look for a company that specializes in insurance that offers quality plans and affordable prices.

Having chosen the insurance company, one should understand the coverage available and assess which one is best suited to your family. Next, calculate the insured capital, and, before signing the contract, evaluate factors such as:

lack of the policy;
geographical coverage of coverage;
excluded risks;
The maximum amount of insured capital;
Prize amount;
product availability under specific policies.

Take advantage and do a simulation to set up the ideal plan thinking about your financial security and that of your dependents.

Find out how much life insurance costs and how it is calculated

Find out how much life insurance costs and how it is calculated

There are several characteristics that are considered to define the price of life insurance.

The price of insurance varies according to the value of the insured capital that is intended to receive indemnity, the age of the insured, and the risk that it represents in view of the possibility of the risk covered by the policy. Healthy lifestyle habits, sports (provided they are not radical) or physical activities, the balance between weight and height, not being a smoker, and having a less stressful and less risky profession contribute positively to the price of insurance.

The cost of life insurance will also be higher or lower according to the amount of indemnity (insured capital) intended for the additional coverages you hire. In the natural process of life, the probability of death increases with increasing age, which increases the risk of indemnification for the insurer.

Thus, it is very common for the premium for plans structured by age or age group to be recalculated each year or each age group change. Another reason for the premium to rise is the increase in the value of the contracted insured capital.

Age range

It is noteworthy that in plans structured by age or age range, the increase in the amount of insured capital (indemnity) does not follow, in the same proportion of periodicity, the premium adjustment (insurance price).

However, premium and insured capital are updated each year, according to the inflation variation index that appears in the general conditions of the contracted insurance plan. In an individual policy, life insurance tends to cost more, due to the personalized coverage. The collective plan, on the other hand, is usually more affordable, as it dilutes the risk in a group of people.

The drawback is that the insured capital values ​​may be lower and the coverages less comprehensive. This is because the definitions of values ​​and coverage of the collective policy are previously negotiated by the representative of the company, institution, union, association, etc. and it is not always possible to establish different criteria per insured.

The difference between life insurance and pension

The difference between life insurance and pension

Some people may be confused when choosing between life insurance or a private pension plan.

The pension plan aims to be long-term savings, that is, it is part of your retirement planning. Social security is a way for you to save today to have a reserve when you stop working.

Life insurance is an immediate protection. With the policy in hand, whenever an event is covered by the policy occurs, the insured or the beneficiary receives what was agreed upon when contracting the insurance.

Both protections are important for a successful financial strategy.

Private pension

Private Pension was born to complement Social Security and compose the retirement planning of clients.

Usually, banks and independent insurers offer this type of product. In private pension plans, the customer chooses the amount of the contribution and the frequency with which it will be made. The amount to be received will be based on the contribution that was made and the results of the financial investments linked to the plan.

Life insurance

Life insurance is considered a protection against unforeseen circumstances. So, contrary to what many people imagine, it is a product suitable for people of all ages. If you have someone you would like to support in your absence, then you should hire this service.

After all, this is the goal of life insurance: to guarantee the financial security of your dependents for a certain period of time if you are unable to do so and cannot be confused with a private pension plan.

Insurance solutions can also be used in life

Insurance solutions can also be used in life

Insurance can bring benefits in situations such as disability and serious illnesses

There are many people who understand that life insurance is death only as a cover. In fact, this type of product is just one of several options that the market offers.

Coverages whose beneficiary is the client and, therefore, are used in life, are also good alternatives for financial planning.

The insurance for disability exists to ensure that the customer will bear the costs under their responsibility if you become unable to generate income due to an unforeseen caused by accident or illness.

The purpose of this type of coverage is to guarantee peace of mind for income protection.

For temporary cases, a solution in the life insurance market is Temporary Disability Daily (DIT) coverage. “In general, the operation of this product is very simple.

In the case of temporary leave from work, caused by accident or illness, the client receives a daily rate, observing the value and specifics of the contracted plan ”.

What if you were diagnosed with diseases like cancer, Alzheimer’s disease, stroke, or acute myocardial infarction? Would it be important to have a reserve for specific treatment without affecting your savings?

It is for this purpose that insurers offer the coverage of Serious Diseases.

“Serious Illness insurance is complete protection designed to support you in the discovery of more complex health problems.

With it, in the case of diagnosis of any of the more than ten covered diseases, you receive the contracted amount at once to help with treatment expenses or other expenses ”.

The insurance fine print that may surprise you

insurance fine print

One of the great myths about insurance is the amount of fine print you can find on the policy. Or at least that’s what happened a while ago. Currently, the contents and limitations of the insurance policy have been simplified and the size has been equalized.

That doesn’t mean that the myth is gone, the font is bigger and usually in bold, but still, it may still surprise you. And almost always the surprise is negative.

I have been involved in insurance for more than three decades and still today I hear how the insurer clings to the fine print to avoid paying.

So I think the time has come to dedicate an article to the limitations of the insurance policy that cause so much abuse.

Let’s go with it!

How are the clauses of the insurance contract different?

As in any other contract, in the insurance contract, there are also stipulations and clauses that bind those who sign it. In the article on how to interpret an insurance policy, I tell you about the parts that make up the contract. In this one, we are going to see what is the difference between the delimiting clauses and the limiting or excluding clauses.

The general and particular conditions will be drawn up clearly and precisely. Clauses limiting the rights of the insured will be highlighted in a special way, and they must be specifically accepted in writing.

The Insurance Contract Law has been in force for about 40 years and although it has undergone several updates, the last one took effect on January 1, 2016, a few Supreme Court rulings have been needed to precisely define the difference between the risk delimiting clauses and limiting clauses in the insurance contract.

For the TS, the risk delimiting clauses are those whose purpose is to define the object of the insurance, specifying which risks, if they occur, will entitle the insured to receive the agreed benefit.

However, by limiting clauses, he understands that they refer to conditioning or modifying the rights of the insured and therefore the compensation, once the event that is the subject of the insured risk has occurred.

The insurer will compensate for the market value of the car if you collide with a lamppost and you are not drunk.

This is a typical example of self- damage coverage in car insurance. If you collide with a tree (insured risk) the company will pay you the market value (coverage limitation), as long as you do not drive the car drunk (limiting condition).

What delimiting clauses can I find in my insurance policy?

Simple, right?

Of course on paper, if it seems so.

But things get complicated when they put a booklet with more than 40 pages on the table. Packed with articles, bold text, and different font sizes or taking you from one article to another.

As I was saying, risk delimiting stipulations are those that define the object of the contract. That is, they define and specify:

  1. What are the risks that constitute the object of the insurance.
  2. What amount is insured and what are the limits of the benefit.
  3. During what period it is constituted,
  4. In what time frame.

Its purpose is to establish, without ambiguity, the objective bases of the nature of the risk in coherence with the object of the insurance. If we take this to your insurance, you will find these delimiting clauses:

The clauses that define the risk.

This group includes the conditions that describe the risk and the coverage provided by the insurance contract.

They are clauses whose wording must be clear and understandable, although they do not need to be highlighted in the policy. These are some:

  1. Those that identify the parties that establish the contract, insurer, and policyholder, insured, or beneficiaries.
  2. They determine the people, property, or activity that is the subject of the insurance. If what you are insuring is a house, a car, an activity, or if it is health insurance or life.
  3. Where the risk is located and what are its characteristics and identifiers. The place where the home, business, or community is located, what are its characteristics, what prevention and protection measures it is equipped with, or the license plate and accessories installed if it is a vehicle.
  4. Sums insured. It is the value that we assign to the insured assets in the event of a risk.
  5. What risks are covered, which must be consistent with the nature of the insured property? If the object of the insurance is an asset (the house, the car, or the mobile ) the risks covered will be repaired or replaced. When it comes to people, the defined risks will be aimed at providing a service, medical care, compensating the insured or his beneficiary. For example, if you die or become disabled.
  6. The period of coverage. These clauses determine when the insurance begins when it ends if it is possible to extend it and for how long.
  7. The price of the insurance. It is one of the most important insurance conditions, so you must detail what makes up the price, and the conditions, if any, for its update.

Delimiting clauses of the contract.

There are other conditions in the insurance contract that delimit certain rights and obligations of the parties, which by their nature must be significantly highlighted in the policy.

Fundamentally, they are clauses that establish the limits provided by the insurance coverage or the procedures that the insured and insurer must follow in certain circumstances.

The clauses referring to the coverage limits are made up of those that determine the amount of compensation assumed by the insurer in each guarantee or all of them, as well as the deductibles or deficiencies that the insured assumes in each of the benefits. Insurance.

Other conditions do not become limitations of the insurance policy but that must be highlighted because they regulate the conditions and deadlines to oppose the extension of the insurance or its unenforceability. Also how to act in the event of a claim or how will be the communications with the insurer.

The limitations of the insurance policy. A (not so) small letter that may surprise you.

The limitations of the insurance policy are established by the so-called limiting or exclusive clauses. These are those that restrict, condition or modify the rights of the insured to compensation or the provision of the service by the insurer, once the event that is the subject of the insurance has occurred.

A few lines earlier, it referred to the fact that these are clauses that must be highlighted especially in the contract and that must be expressly accepted in writing by the policyholder. This is intended for the insured to have exact knowledge of the conditions that regulate the insurance contract.

The Supreme Court considers it sufficient that the limitations of the insurance policy are drafted in such a way as to allow the insured to understand their meaning and scope to differentiate them from those that are not of that nature.

By saying this, you validate your writing in bold or so that they stand out from the rest. Regarding the express acceptance in writing, it considers that the policyholder must sign both the general and the specific conditions, as these are the ones that usually contain the limiting clauses.

The jurisprudence has highlighted the differences established in article 3 of the LCS between the limiting and harmful clauses. While the former, even without being favorable to the insured, are considered valid referring to the nature of the insurance contract, the latter is always invalid.

Having identified the difference between the delimiting clauses and the limiting clauses, now it is time to see how the limitations are grouped in the insurance policy.

The limitations on all insurance coverage.

Many times it is difficult to distinguish between the delimiting clauses from the exclusive ones, despite being highlighted by a different typeface or highlighted in a different color, like those in the previous image.

However, we can distinguish between two groups of exclusions: those that affect all the coverage of the contract and the individual ones of each guarantee.

The limitations of the insurance policy that affect all the guarantees revolve around:

  • Damages that occur before contracting the insurance or are different from those defined in the contract.
  • Those events are related to the attitude and activity of the insured. Those caused by intent or gross negligence, inexcusable negligence, or neglect in the maintenance of the goods are excluded.
  • Those declared by the public power as catastrophic or national calamity are also excluded. Those due to phenomena of nature or whose coverage is paid by the Insurance Compensation Consortium.
  • The expropriation or requisition of property, by the imperative of any government or those that occurred in war conflicts.
  • And normally, the payment of fines or penalties of any kind.

These exclusions, common to practically all contracts, are joined by others specific to each type of insurance.

The particular limits of each guarantee.

One of the characteristics that must govern an insurance contract is that the conditions that define it must be related to its nature. This requires that each of the coverage you provide has its own limitations or exclusions.

If you compare the previous image with this one, you will see that both are related to theft coverage. But while the former corresponds to home insurance, the latter refers to car insurance. Both are part of the respective general conditions and may be modified or suppressed through the particular or special conditions of the contract.

Both the general and specific exclusions of each guarantee must be known and expressly accepted by the insured. This consent requires that both the general and particular conditions must be signed in writing. If the contract is signed online, the acceptance can be made digitally.

Harmful clauses, without effect for the consumer

The general conditions, which in no case may be detrimental to the insured,…

In this way begins article 3 of the Insurance Contract Law, whose content gives as much play as to write this post.

The aforementioned text, in addition to referring to the delimiting and limiting conditions of the rights and their acceptance by the insured, is picked up from the start mentioning a third group of clauses, the harmful ones.

But while the former may be valid, although they require the express acceptance of the insured, the damaging clauses are not, as long as they may leave the content of the contract empty or frustrate the economic purpose for which the subscriber is signed.

As you can see, the concept of the injurious clause is more restrictive compared to the limiting one, making them invalid or null.

But it is also that the law requires its withdrawal from the insurance contract in the event that any of the general conditions of the contract is declared void by the Supreme Court.

Final thoughts

Anyway, I have come up a bit and the article has become a bit long, but the better you understand what the limitations of the insurance policy are, the better you can defend your rights before your insurer.

If you still have any doubts, this is the essential information about the three types of conditions that you can find in your insurance:

  1. The clauses whose purpose is to determine or delimit the object of the contract, define the risk, its amount, or the term and scope of coverage.
  2. The limiting conditions whose purpose is to condition or limit the rights of the insured and therefore their compensation provided that the insurance risk had occurred.
  3. Harmful or surprising clauses, which reduce the content of the insurance contract in such a way that it is impossible to access coverage for the claim.

For me, a fundamental aspect when it comes to qualifying insurance is in the limiting clauses it contains because as an insured, the less my rights limit the better.

Do you still have doubts about any clause of your insurance policies? Leave it in the comments section.

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