What is life insurance and what you need to know

Life insurance is a service offered by licensed life insurance companies for a fixed one-off payment or insurance premium or regular contributions for a certain period of time, guaranteeing the accumulation and payment of a certain amount under certain circumstances or within the time limit agreed upon in the concluded agreement.

For more information about your life insurance situation, consult your local specialists. Image: Pixabay
For more information about your life insurance situation, consult your local specialists. Image: Pixabay

The basic life insurance service guarantees your family or other relatives only a certain amount of financial support in case of your death, but there are several types of life insurance:

if you want your relatives to be materially protected in your death and, for example, your credit commitments do not become a burden for the whole family, then you will have life insurance that allows you to provide material support to your family by paying small contributions now, probably it will be most needed;

if your plans include the intention to raise capital with a guaranteed interest rate then the most appropriate program is capital formation or universal life insurance, because this insurance program will combine both functions - make your money savings, as well as provide material support to relatives in the event of your death, so the insured person's family will be financially protected not only at the end of the savings period but from the first day of its formation;

If you want your retirement to be financially secured by guaranteeing a private pension in addition to your state pension for the rest of your life, then you will be eligible for private pension insurance aimed at building a private retirement pension to ensure your desired retirement age within a certain period of time.

What you need to know

the insurance contract may be concluded in any currency and the amount and frequency of the contributions may be changed according to the procedure specified in the insurance contract;

when choosing life insurance, the insurer may ask you for the conclusion of the medical examination, and the medical examination must be carried out by the medical institution indicated by the insurer, in which case the Insurer covers all the expenses of the medical examination;

submitting an insurance application to the insurer does not oblige you to enter into a contract;

the insurance shall take effect on the day following the payment of the first insurance premium unless the contract provides for another entry into force;

Your upcoming insurance indemnity depends on the number of deposits and the accumulation period - the earlier the contract is signed, the more capital you can accumulate;

When entering into a contract, it is advisable to indicate immediately the person who will receive the insurance indemnity or part thereof in case of your death. If the beneficiary is not specified, the indemnity is paid to the person whose rights are determined by law;

if you have agreed on a free payment schedule, you have the option of adjusting your insurance contract to your life situations, for example, if you want to make larger or smaller payments or skip them, you do not need to switch the contract;

in the event that you are unable or unwilling to continue making contributions, you will be exempt from the payment and the contract will continue with a reduced final fee, while you can get a repurchase amount that is usually less than the accumulated capital upon the termination of the contract;

by concluding an insurance contract, the guaranteed interest earned on the savings, which is added to the savings on a monthly basis, sets the principle that interest on interest increases;

In addition to guaranteed earnings interest, you may also be offered additional profit interest. They are calculated at the beginning of each year from the accumulated amount. This percentage depends on the performance of the insurance company during the previous year and is determined by the shareholders or the board of the insurance company;

The State Revenue Service will reimburse a portion of your tax payment if the total amount of life insurance premiums paid in an insurance company does not exceed 10% of the annual taxable income, as well as contributions to private pension funds not exceeding 10% of the annual taxable income and health insurance premium, if it does not exceed limit.

For more information about your situation, consult your local specialists.

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