Life insurance: what is it and what are the benefits?

Life insurance is an important financial tool for ensuring the financial protection and well-being of loved ones. These policies offer a number of options that allow you to tailor the insurance to your individual needs. In this article, we will explore the options and general benefits of life insurance, regardless of the country of reference.

1. Term life insurance

Term life insurance is a policy that covers a specific period of time, usually between 10 and 30 years. During the period of coverage, in the event of the insured's death, beneficiaries will receive a cash payment, known as a death grant. This type of policy is often chosen to provide temporary financial protection against financial commitments such as a mortgage or children's education.

2. Whole life insurance

Whole life insurance policies are open-ended policies that offer coverage for the entire life of the policyholder. This type of policy may include a refund value in the event of cancellation or early withdrawal. One of the distinctive features of whole life insurance is the ability to accumulate cash value within the policy, which can be withdrawn or used as collateral for a loan.

3. Universal life insurance

Universal life insurance is a flexible type of policy that combines the elements of term insurance and whole life insurance. These policies offer open-ended coverage, but also allow the policyholder to vary the premium amount and level of coverage. In addition, universal life insurance allows you to accumulate cash value and offer investment options.

Benefits of life insurance

a) Financial protection: Life insurance provides financial security to the designated beneficiaries in the event of the death of the insured. This payment can be used to cover immediate expenses such as funeral costs, but also to ensure the continuity of the family's standard of living or to cover debts and financial obligations.

b) Savings and investment: Whole and universal life insurance offers the possibility of accumulating cash value over time. This can act as a cash reserve, which can be used to meet contingencies or as a source of funding for future projects. In addition, some policies offer investment options that allow you to obtain a return on the accumulated money.

c) Tax benefits: In many countries, life insurance offers tax benefits both during the accrual phase and when the benefits are paid out