The benefits of life insurance in Chile

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A person’s financial life goes through ups and downs, including unforeseen events such as illness and accidents. In this sense, anticipating these events is essential and critical to future financial planning.

Taking out life insurance is a good way to protect yourself against these events because it offers security and the certainty of having money available even in an unfavorable situation. That is why we dedicate today’s article to the question of what life insurance is and what Life insurance benefits are. Don’t miss it!

What is life insurance?

It is a personal financial stability protection tool provided by an authorized management company, in this case a life insurance company.

In Chile, life insurance companies are regulated by the Financial Market Commission (CMF). But why buy life insurance? Life insurance is designed to achieve the following objectives in the event of death or disability of the insured:

– For financial protection of the insured person against personal accident and/or health risks.

– To protect loved ones and family assets.

– To pay off loans if the Insured has incurred a financial debt.

– Payment partners or creditors of the insured (e.g. in the case of a business partnership).

– Ensuring an income for the insured or his beneficiaries.

What types of life insurance are there?

According to the Association of Chilean Insurers (AACH), the following formats exist:

1. Whole life. Your insurance cover extends until the death of the insured person, ie it guarantees the payment of a capital sum immediately after the death of the insured person, regardless of the time of death, be it due to illness or accident. The beneficiary or beneficiaries entered in the policy will receive the compensation as soon as the death is recognized.

2. Term. As with Whole Life, lump sums are paid to beneficiaries immediately after the insured dies of natural causes, suffers a fatal accident, or becomes accidentally disabled. However, the event of damage must have occurred within a certain period of time (before the agreed insurance period expires). If the insured lives after this period, the insurance expires.

3. Family Protection. Protects all members of the family unit, either in the event of death or other risks such as disability or dismemberment of the insured, if included in the policy. Like Temporary Life, its duration is for a defined period of time.

4. Disability or Invalidity. Insured is the insured person’s inability to work because his or her physical or mental performance is weakened by illness or an accident. Payment of indemnity is equivalent to payment of a lump sum or an annuity, depending on what is provided for in the policy. Its duration is for a defined period of time.

5. Support. Covers any service, assistance or expenses arising from the death of the insured person of the policy. Its duration is for a defined period of time.

The 3 benefits of taking out life insurance

The following are the main benefits that life insurance companies offer:

1. Economic security for the family in the event of an accident or death.

The death of the head of household is an issue that needs to be addressed now. Even if both parents work, the loss of income, even for just one parent, can make it very difficult to maintain a normal lifestyle.

That’s why life insurance provides financial security and allows you to meet your family’s needs even when they can no longer count on you.

2. Debt Settlement

If there is debt at the time of death, the funds received by the beneficiary can be used to pay off any outstanding debt.

This would save your loved ones from having to deal with the situation that can get them in a bind if they don’t have the necessary resources.

3. Contribution for old age or disability

Depending on the insurance company, there are some additional policies or coverages that protect you against events such as permanent or partial accidental disability.

On the other hand, there are other insurance plans that include savings that could be used to supplement your retirement savings.

In any case, however, you can use the main insurance to ensure the financial stability of your loved ones in complex situations that require a plan B.

4. Payment of the funeral expenses for the insured’s funeral services

Funeral expenses are often quite high and are particularly difficult for families to cope with when the main breadwinner dies. One of the ways to deal with this situation is to use part of the insurance funds for these purposes.

As you can see, getting life insurance in Chile is highly recommended because it provides protection for those you love the most. You can find a variety of options on the market to suit your needs and budget.

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