TYPES OF LIFE INSURANCE
Providers commonly distinguish between 3 types of life insurance. They differ in their setup and purpose.
Term life insurance – you can choose from a full range of risks that you can insure against. These include not only death due to accident or illness, but also serious illness or the permanent consequences of illness or accident. Your entire monthly premium then goes towards covering them. Once your insurance ends, the insurance company will not refund the premium you have paid.
Reserving insurance (investment life insurance) – offers not only cover for agreed risks, but also an investment component. The money you send to this part of the policy is invested by the insurance company. At the end of the policy period, the insurance company pays you this money. How much money you get depends on how effectively the insurance company has invested.
In general, however, it is better to use specialised products for investments, not insurance. If you still opt for this option, we recommend keeping the investment component to a minimum.
Also bear in mind that if you take out this type of policy, you should not cancel it straight away. If you do so within the first two years of taking out the policy, the insurer will usually pay you nothing. And even in the next three years or so, the payout is low.
Accident insurance – only covers risks that are related to an accident. For example, you will receive a daily accident benefit or money for the permanent consequences of the accident. And if you don’t survive the accident, your family will get the money. But this policy does not cover illness or its consequences. Yet most serious health problems are the result of illness. So accident insurance doesn’t protect you from the most likely risks.
Recommendation from banka.cz: Get a comparison of the different options. Contact us and we will prepare a comparison of investment life insurance and risk life insurance.
3 EXAMPLES OF HOW TO SET UP THE RIGHT INSURANCE
For a life insurance policy to really help you, you need to set it up correctly. Always base your decision on your current life situation. To help you know how to proceed in different cases, we have prepared 3 practical examples.
You are single and without obligations – in this case, you don’t need a large death benefit because no one is financially dependent on you. Setting up other risks depends, for example, on your profession.
You have a family – disability insurance is essential. Providers offer insurance against all 3 levels of disability, but it depends on your profession whether you use it
The lowest level 1 is not necessary for everyone. However, you will definitely use it if you work manually. In fact, any health limitation can jeopardize your employment. And therefore your income. Much more so than for people who work in an office at a computer. For them, coverage for higher levels of disability is usually enough.
At the same time, set a sufficient sum insured in case of death. Whatever happens to you, you can be sure that your family will be at least partially provided for.
Temporary disability insurance is also often useful. The insurance company will then compensate you for the loss of income during the period of incapacity. This is particularly important if you do not have a large financial reserve.
You have a family and a mortgage – so you also have to think about always having enough money to pay the mortgage. Especially if your partner is financially dependent on you. Therefore, set your death benefit to cover the mortgage and family.
Adjust the disability insurance to this. If you become disabled as a result of an accident or illness and are out of work, your family will lose a significant part of its income. While your mortgage will remain and household expenses will likely increase (disabled people usually need special equipment, nursing help, etc.).
Again, the sum assured should be set so that you can deal with this situation. And virtually the same rules apply if you are unable to work.
See how much your selected risks insurance will cost you. Enter the necessary data and our life insurance calculator will prepare a comparison of all the corresponding offers. Use it and prepare your life insurance online!
WHAT LIFE INSURANCE INCLUDES
Life insurance allows you to prepare for different situations. It offers several different policies, and once you have chosen the type of insurance, you choose the ones that suit you best.
Usually, you will put together your insurance from the following products:
Accidental death insurance. You can be sure that even if you die, your family will not be left without money. The insurance company will pay the amount you agree in advance. You can set either a fixed amount or a decreasing amount.
At the same time, the contract specifies a beneficiary – the person to whom the insurance company will pay the money after your death. This is typically the other partner or a descendant.
The classic option focuses on death and illness, but you can also take out insurance for accidental death only.
