The benefits of buying 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 crucial for financial planning for the future.

Taking out life insurance is a good way to protect yourself against these events as it offers peace of mind and the certainty that there will be money available even in an adverse situation. For this reason, we will dedicate today’s article to understand what life insurance is and what are the benefits of life insurance. Don’t miss it!

What is life insurance?

It is a tool to protect personal financial stability provided by an accredited administration company, in this case a life insurance company.

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

– Financial coverage of the insured against the risk of accidents and/or health.

– To protect loved ones and family assets.

– To repay loans in case the insured has financial debt.

– Payment to partners or creditors of the insured (in the case of a business partnership, for example).

– Guarantee of income for the insured or his beneficiaries.

What types of life insurance are there?

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

1. A lifetime. Its coverage is until the death of the insured, i.e. guarantees payment of a lump sum immediately upon the death of the insured, irrespective of the date of death, whether due to illness or accident. The beneficiary or beneficiaries registered in the policy will receive the benefit as soon as the death is accredited.

2. Lifetime. Like Whole Life, the capital is paid out to the beneficiaries as soon as the insured dies of natural causes, suffers a fatal accident or accidental disability. However, the accident must occur within a certain period of time (before the end of the agreed term of the insurance). If the insured is alive at the end of this agreed period, the insurance is terminated.

3. Protection of the family. Protects all members of the family group in the event of death or other risks such as disability or dismemberment of the insured, if contained in the policy. Like temporal life, its duration is for a certain period.

4. Disability or Disability. Covers the incapacity of the insured due to weakening of his physical or intellectual capabilities due to illness or accident. The payment of the benefit corresponds to the payment of a lump sum or an annuity, as provided in the policy. Its duration is for a certain period.

5. Assistance. Covers services, assistance or expenses caused by the death of the insured under the policy. Its duration is for a certain period.

The 3 advantages of acquiring life insurance

The following are the main benefits offered by life insurance companies:

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

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

That’s why a life insurance policy provides financial security and allows you to cover the needs of your family even if they can no longer rely on you.

2. Repayment of the debt

If there are debts at the time of death, the funds received by the beneficiary can be used to cover any outstanding debts.

This would save your loved ones from having to deal with a situation that could leave them stranded if they don’t have the necessary resources.

3. Retirement or disability contribution

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 insurances that include savings that can be used to supplement your retirement.

In both cases, however, you can take advantage of basic coverage to protect the financial stability of your loved ones in complex situations that require you to have a plan B.

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

The costs associated with funeral ceremonies are often quite high and this is especially difficult for families to cope with when the main income earner dies. One way to deal with this situation is to use part of the insurance funds to cover these goals.

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

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