Life insurance policy: a pension tool and a long-term investment to have the best possible quality of life. Here’s what it is.
The life insurance policy is a type of insurance that provides an annuity or capital for the policyholder when he remains alive after a certain date. It is a bet with your insurer: do you know what field up to 60 years? Come on if you can, I’ll pay you! We can also consider the life insurance policy as a sort of supplement to retirement or as a long-term economic investment.
Life insurance policy: definition
Thinking about your future is an act of respect for yourself and the desire to have the best quality of life possible. A life insurance policy is a choice that you can consider both from a pension perspective and as a form of investment. But let’s immediately see the definition from the Ania glossary:
“Life insurance contract by which the insurer undertakes to pay a lump sum or an annuity if the insured is alive at the agreed maturity. Life insurance policies can be with or without counter-insurance. “
It is therefore a type of policy that ensures an annuity or capital to the subscriber if the subscriber is still alive at the deadline established in the contract. The beneficiary of the policy, in this case, is the one who underwrote it. This is why this solution can also be understood as a possible integration, of a private type, to the pension.
However, life is unpredictable, we must keep this in mind, and there is also the possibility that it will not be very long for everyone. In the event of the contracting party’s premature death, the premiums paid will be re-evaluated and distributed to the beneficiaries indicated in the contract or to the legitimate heirs.
In short, a “live case” insurance contract is a form of consideration for oneself, even before being an intelligent pension opportunity and a prudent investment.
There are three possibilities for choosing the life insurance policy, let’s see them together:
- Contract with an immediate annuity: the insured pays the premium in a single payment. From the payment, start receiving an annuity or a temporary annuity at an agreed deadline;
- Contract with a deferred annuity: starting from a predetermined date, if the insured is still alive, he will begin to receive an annuity;
- Contract with deferred capital: if the insured is still alive at the expiry of a date established and indicated in the contract, he will receive a capital revalued by interest.
Which of these modes is right for you?
It is very difficult to answer this question, as each person experiences a different situation. However, I can invite you to consider these aspects and then decide:
- what are your retirement and insurance goals?
- what is your financial condition?
- what is your risk appetite?
- which premium payment interval is suitable for your availability?
Clarify these aspects and you will see that you will find the perfect solution for you.
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Maturity, annuity or capital, reversibility
The duration of the insurance contract is very important for a “live case” life policy and must be defined at the time of stipulation based on the needs of the policyholder.
When it comes to so-called deferred payments (i.e. when the company delivers a capital or an annuity after a predetermined date), companies give you the possibility to change your choice also at a later time or even at maturity, regarding annuity or capital. Let me explain: if you have signed a life insurance policy that provides for the disbursement of capital in a few years, but in the meantime, you have changed your mind and would prefer to receive an annuity instead, the insurance company allows you to think again.
Keep in mind that in the case of an annuity, the insurance company will bear the longevity risk. This means that if the policyholder were to live (even for a long time) beyond the expiry of the policy, the insurance company will have to pay the annuity. This is one of the advantages of this option.
If, on the other hand, the insured should be absent during the period of validity of the policy, as we have seen, the premiums paid up to that moment would be paid to the legitimate beneficiaries. Life insurance blogs provide for the reversibility of the annuity.
In any case, it is possible to request the redemption according to the contractual conditions. In this case, it will not be necessary to wait for the deadline to be able to receive the capital. The criteria for determining the amount to be obtained are also indicated in the policy.