If you doubt how life insurance works, we assure you that it is easier to understand than it seems. Thus, the operation of life contracts is simple, although, to understand the whole process well, below, we will explain little by little all the elements to take into account before signing your policy.
Why choose life insurance in the first place?
Before thinking about the definition of this product, it will be necessary to consider that its importance lies, precisely, in the fact that the holder of the insurance, that is, the person who does it, pays a fee to the insurance company so that his relatives, stipulated as recipients, collect money in case the protected person dies under the agreed conditions.
Therefore, if what you want is that your family can be supported, even when you are not there, think that, previously, you take out life insurance to prevent your loved ones from suffering any type of economic problem as a result of your loss. And, in case your death occurred, your income would stop entering the family home. On the other hand, if your insurance covers the possible disability, this help will serve to solve the possible economic difficulties that your disability situation would imply to your family nucleus.
But who protects me? The insurers!
As we have already said, if there were the death of an individual from your family nucleus or even your own happened, the income that would stop entering month by month due to death would cause an economic destabilization in your home. This imbalance is what is intended to be solved with this type of policy, with life insurance. And, if you sign a contract with this protection, as the name suggests, your family would be guaranteed an economic cushion to face the new situation and your loss, being able to adapt to it.
So, life insurance offers, therefore, a simple mechanism: if the insured dies, the insurance company is responsible for protecting your loved ones by paying compensation, which will be received by the beneficiaries indicated in the policy. This is the operation of life insurance, based on financial help from the insurer.
And ... how do insurance companies work?
This is also simple to understand. It turns out that life insurance companies are responsible for assuming the risk for which they insure you and, as such, are the entities that commit to pay in case the loss for which you are insured occurs. Life insurance, therefore, allows you to have protection for your family, while, for the insurer, it is a possibility with which to generate a profitable business.
Thus, the operation of insurance companies is based on the amount to be paid in the event of an accident. Therefore, we warn you that both the calculation of the price and the aid to be paid to the beneficiaries are variable. In this sense, both figures will depend on certain factors: the profile of the insured, the capital of death to be insured, your age when making the contract, etc.
Seen the seen, the usefulness of these products is more than demonstrated, because with them you can take care of yours even when you are no longer there.
On the figures that make life insurance work
In life insurance, so that you understand why they are the way they are, different people are needed and each and every one of them gives meaning to the protection contract. Therefore, we believe that you should know what they are, we want you to know who is who so that, ultimately, you end up understanding how life insurance works.
Insured
We have already mentioned it, but it is the main figure of life insurance, since it is the person on whom the policy falls, covering the risks agreed in the contract.
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Taker
This will be responsible and holder of the policy, being in charge of paying it. Thus, the policyholder has the rights and obligations on life insurance.
Beneficiary
Although we have also mentioned it already, it will be the person / s who will receive the compensation agreed in the life insurance, in case of the accident.
Insurer
We have also already referred to it, since it is the insurance company, or mutual, which undertakes to pay the capital in case of the accident, whose coverage is included in the policy.
Insurance Mediator
This will be the company, or natural person, that distributes the insurance and is responsible for the procedures between the company and the policyholder. There are also independent mediators, such as insurance brokers. Other mediators work with a company they depend on.