Acquiring a Life Insurance

The life insurance acquiring process involves a set of decisions, namely in terms of coverage and its purpose.

It is common to see life insurance associated with home loans. In these cases, the beneficiary is the bank and the capital is normally indexed to the value of the loan for the purchase of the property. It may be necessary to update the principal amount as the loan is repaid.

Therefore, if the purpose is the protection of the family and dependents, that is, protection against the loss of human capital for those who may depend on our future individual income, then life insurance cannot be just housing credit. We must contract a life insurance protection in which we can have full autonomy to define the value of the capital, the coverage and the beneficiaries in the event of an accident.

Acquiring process

In the acquiring process, it is important to pay attention to all relevant information and documentation. The insurer to whom we ask for a simulation is required to provide a set of information before actually taking out the insurance.

In summary, and according to the manual provided by the ASF, we highlight the following:

• General information;
• The coverages to be hired;
• The premiums for each coverage;
• The way in which profit sharing, if any, is calculated and paid;;
• The guaranteed minimum yield (minimum guaranteed interest rate and respective duration), if any;
• Redemption, reduction and penalty values;
• The charges and when they are charged;
• The tax regime (eg existing tax benefits);
• The possibility of accessing medical data from exams performed.

If it is a variable capital contract, you must also indicate:

• Reference values for capital calculation;
• The number of participation units;
• The nature of the representative assets (whether they are stocks, bonds, etc.).

Life insurance policies must contain the terms and conditions agreed between the parties, namely the general, special and particular conditions applicable and also:

• The general information required for all insurance policies;
• The way in which the premiums will be paid to the insurer (conditions, term and frequency);
• Whether or not there is a right to profit sharing and, if so, how it is calculated and paid;
• The period within which the contract can be reinstated under the same conditions after it has ended;
• The conditions for maintaining the contract in the event of the death of the insured;
• The rules for the formation of the investment portfolio.

According to the previous information, we can verify that it also covers other insurances and operations in the Life branch.

Thus, the typologies of life insurance are:

• Life insurance: insurance intended to cover mainly death and survival risks (constitution of a savings account, capitalization insurance or financial life insurance).
• Nuptial/birth insurance: insurance for the payment of capital and/or annuity in the event of marriage or the birth of children;
• Insurance linked to investment funds (unit linked): life insurance with variable capital in which the amount to be received by the beneficiary depends, in whole or in part, on a reference or market value consisting of one or more participating units.
  Insurance linked to investment funds qualify as structured savings instruments (ICAE).
• Capitalization operations: contracts whereby the insurer undertakes to pay a predetermined amount, after a certain number of years, in exchange for a payment of a single or periodic premium.

Companies can also choose to include life insurance in their employees' salary package. In fact, it is an increasingly common practice. Coverages can be different:

• Serious diseases;
• Total and Permanent Disability due to Accident;
• Total and Permanent Disability due to Traffic Accident;
• Absolute and Definitive Disability;
• Death by Accident;
• Death by Traffic Accident.

In the next article, we will talk about Life Insurance Coverage.