In concrete terms, life insurance is a contract between individuals and insurance companies that provides for the payment of a sum to the beneficiaries if certain pre-established conditions are met.
In life policies, for example, the insurance company pays the sum to the beneficiaries if the insured is still alive at the contract's expiration. Conversely, in death policies, the beneficiaries receive the agreed sum if the insured passes away.
One of the most common types of the latter is temporary death insurance (often abbreviated as TCM). This type of life insurance covers the insured against the risk of death for a specified period, after which the contract is considered concluded. The capital is paid out if the negative event occurs while the contract is active.
Insurance products like temporary death policies are recommended for people who need to protect the future of their loved ones. With a TCM policy, you can protect your family in case the primary source of income is lost, ensuring financial peace and maintaining the usual standard of living.
Therefore, a solution that offers coverage for the risk of death is particularly useful for:
Life insurance works very simply, which we can summarize in the following points:
First, you need to assess how much you would need in case of a negative
event. This assessment must consider that the higher the
sum, also called the insured capital, the higher the amount needed
to cover the risk indicated in the contract.
To determine the appropriate amount to insure in your life policy, our online calculator can assist you.
To activate the insurance coverage, the policyholder must pay a sum of money, called the premium, to the company. Insurance companies calculate the premium amount based on certain criteria, including:
Payments are made at regular intervals, as defined in the contract, which can be monthly, semi-annual, or annual.
At the time of signing the contract, it is necessary to identify two figures:
Following the payment of the premium, the insurance company is obliged to pay the contract beneficiary the amount specified at the time of signing the policy only if the cases provided for in the contract occur.
The topic of life insurance is particularly complex. We have now seen a summary overview, but if you are interested in taking out life insurance, it is essential to be well-prepared and delve deeper into the topics presented previously.
What is the duration of a temporary death policy? How do you choose the beneficiary? Can you claim a deduction for insurance premiums?
To find answers to your questions, get useful advice, and explore the previously covered topics, consult our life insurance guide:
