Life takes many turns. Although today a person enjoys health and economic security to cover their needs and those 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 a life insurance it is convenient to ensure the future, becoming an essential support for families and for the insured themselves. These are the advantages:
1. The main objective: protect the future
It is more than likely that, at some point in life, people wonder what would become of their family or of themselves if something happened to them. With life insurance, you know the answer in advance: you would have a certain income to guarantee the quality of life. And it is that the main function of life insurance is to protect individuals against an eventual 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 one third of the deceased between 41 and 50 years in Spain is protected with a insurance of this type.
In other words, 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 whatever happens, a family will be able to maintain the usual standard of living. for a while to readjust to the new situation ”, he explains Jose Manuel Veiga, Director of Protection Insurance at BanSabadell Seguros.
According to a report by the Unespa initiative, We Are Safe, in Spain there are 3.8 million mortgaged people who have life insurance
Among these variables it is necessary to consider, for example, that the children can continue their studies or maintain their habitual residence even though part of the mortgage loan still remains to be paid.
2. It becomes relevant in the most important moments of life
The basic coverage of a life insurance is the death of the insured, a fatal circumstance in which having contracted a product of these characteristics acquires a special relevance. Especially for those families with a high economic dependence, or even total, on the insured person.
In these situations, the beneficiaries or the insured himself would receive the previously fixed insured amount, to cushion the economic impact caused by the absence or absolute permanent disability of the insured person. Thus, as already mentioned, they could face the payment of a mortgage or a loan.
In Spain, there are 3.8 million mortgaged people who have a life insurance, according to the report Fate, at the worst moment. Mortgage-related life insurance benefits, from the Unespa initiative, We Are Safe. These people can be calmer knowing that they and their family members will not have problems to face the payment of this debt, no matter what happens.
3. Compensates your hiring
Many people wonder if it is really necessary to assume another expense in addition to those that they already have habitually and hire a life insurance, since it is voluntary. However, experts emphasize that it is a type of insurance that takes on special relevance in the most momentous moments and with the essential utility of shielding the economic needs of the family and of 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 these types of possible situations we should all think about protecting our own,” he says. Veiga.
How much does it cost to purchase life insurance? The average annual investment is 600 euros per person and policy, according to Unespa data, well below the more than 1,200 euros that other European countries allocate.
Official figures state that, each year, about 70,000 Spanish families are beneficiaries of this type of policy, with an average benefit of 45,000 euros. This amount allows the liquidation of around 4,700 mortgages annually, according to the aforementioned report by We Are Insurance, and exceeding 166 million euros in total.
Four. Another series of covers
Life insurance not only covers in the event of death, it is also very useful to improve the economic well-being of the insured themselves and their family. The reason is that it protects them against equally unfortunate 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 will not be able to carry out any paid work and may also carry certain expenses such as medical expenses or have an amount that compensates for the decrease in income by having to stop working for a while ”, explains the BanSabadell Seguros expert .
But there are more cases in which life insurance shows its importance, since there are 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 a capital advance if you suffer from a serious illness such as a breast cancer. Money that helps the insured to pay for medical treatments that they might not otherwise be able to afford.
5. Tax credits
To encourage the contracting of life insurance in Spain “the tax deduction should be strengthened. In addition, death and disability benefits should be more subsidized at the tax level for the inheritance tax and the personal income tax (IRPF), respectively ”, claims the BanSabadell Seguros expert, since it is currently not possible to benefit from a reduction in the income tax base for the payment of premiums.
Death and disability benefits should be more subsidized at the tax level for inheritance tax and personal income tax
José Manuel Veiga, Director of Protection Insurance at BanSabadell Seguros
However, although insufficient, there are some cases in which you can enjoy certain tax advantages. For example, if the policy is linked to a mortgage, it is allowed to deduct up to 15% of the amount allocated to the purchase of a home on a maximum basis of 9,040 euros, although, yes, the acquisition should have been made before January 1 2013. As for self-employed workers, they can include the insurance payment in their income statement up to a maximum of 500 euros if the policyholder and the beneficiary are the same person.
* Source: BE WHERE YOU ARE FOR BanSabadell Seguros