Taking out life insurance is an important step, both in terms of saving and protecting your future pension or the well-being of loved ones.
Taking out life insurance is a choice made in the awareness that human life is characterized by uncertainty.
The stipulation of a life insurance policy allows you to create a sort of “buffer” in the event of an unfavorable or unexpected event.
However, several doubts may arise about the coverage, costs, or steps necessary for the stipulation. With this brief guide, Helvetia, therefore, intends to provide a series of information to clarify the doubts of those who are wondering whether the time has come to take out life insurance and, in particular, a temporary life insurance policy (TCM).
Life insurance, how does it work?
The first point to clarify concerns the functioning of life insurance. In fact, within the vast perimeter of insurance policies, it is possible to identify two types of life insurance: life and death insurance. There is also a third possibility which includes both eventualities, and it is called mixed life insurance.
First of all, it is important to make a small digression on the ” subjects ” of the insurance, which are: the policyholder, the insured, and the beneficiary. The contractor is who stipulates the contract, manages the administrative obligations, pays the premiums (we will see later what the premium is), can redeem the policy, and also change the beneficiary. The insured is the natural person on whose life the insurance is stipulated (generally the same as the policyholder but can be a different person). Finally, the beneficiary is the person who will receive the insured sums upon the occurrence of the event.
In this context, the premium corresponds to the actual cost of the policy. The premium can be “ or must be paid periodically for the selected duration and according to the chosen periodicity (annual, monthly, six-monthly, etc.). Often, if a payment frequency other than annual is chosen, the premium will be increased by the so-called split interest. Life and death insurance policies also include the single “, in this case, the policyholder pays it only once at the time of stipulation, or annually or recurring
temporary policy in the event of death which is the type of life insurance that allows a family unit to maintain its standard of living even in the face of the disappearance of the main economic support.
These policies are particularly suitable for those subjects who represent the economic certainty of a family, for example, a working mother or father with small children or adolescents of school-age or with other dependents.
Life insurance in the event of death, what is it about?
Temporary Death Insurance (TCM) is a useful tool to guarantee the beneficiary (or beneficiaries) a lump sum in the event of the death of the insured if this occurs within a given period (contractual duration).
The peculiarity of this policy is that the company does not pay the insured capital if the event (death of the insured person) does not occur. In fact, within the period indicated at the time of stipulation (such as 10, 20, or 30 years) the insured person economically protects his beneficiary from the first day of validity of the policy(except for the presence of any waiting periods and exclusions). If and when the event occurs, the premium is no longer paid and the beneficiary receives the insured capital.
It is important to distinguish between TCM policy and full life insurance. In the second case, there is no deadline: the service is performed when death occurs and the insured is certain to transfer the desired capital to the heirs. The principal amount of a TCM policy is also very different from that of a full-life policy.
How much does a life insurance policy cost?
Once the TCM policy to be stipulated has been identified, the company will proceed to a preliminary assessment of the policyholder. This procedure, known as the “ risk-taking process ”, is aimed at identifying the most suitable coverage for the insured, with the related times and costs (the premium to be paid). In the process of underwriting the risk, the insurer evaluates a series of parameters such as age, lifestyle habits, work performed, health status, insured amount, duration, coverage activated, and smoking state.
In particular in a TCM policy:
- the premium is directly proportional to the age of the insured person. A 30-year-old woman will pay a lower premium than a 50-year-old woman;
- if the young woman, however, has the habit of smoking, the weight on the scale changes;
- the state of health, such as the presence of any previous illnesses, also affects the coverage and guarantees ;
- another parameter that leads to a change in the cost of the temporary policy in the event of death is the amount of the insured capital,the amount that the policyholder deems necessary to guarantee the same standard of living as the beneficiary if the insured dies. Different types of TCM are envisaged depending on the insured capital which can be constant or decreasing over time, this aspect also affects the amount of the premium;
- finally, it is necessary to evaluate the coverage. Some TCM policies provide for a series of complementary guarantees that can also be extended to the occurrence of consequences other than death, such as permanent disability. In this case, a percentage of the insured capital can be disbursed to the insured in both an “advance” and an “additional” form (and the entire sum insured will go to the beneficiaries anyway). These guarantees, therefore, entail an increase in the coverage provided and, consequently, in the premium to be paid.
Temporary insurance in the event of death
So far the theory. In case you want to know the cost of subscribing to a TCM policy, you can also calculate a TCM quote online, simply by entering some information such as the date of birth, smoking habit or not, the amount you intend to insure, and the duration of the insurance, or contact your trusted intermediary to obtain a more detailed and complete one.
