Life insurance deals with an insurance company where the policyholder agrees to pay a premium. The insurer admits to paying capital to the beneficiaries designated in the policy in the incident of the insured’s death.
Who Can be the Beneficiary of Life Insurance?
The designation of beneficiaries is what you decide; they can be one or several beneficiaries with equal or different percentages. You may change the initially designated beneficiaries and persons other than the heirs at any time.
If you have kids or other family members dependent on your income, they are usually the beneficiaries of your insurance policy. You can also name an NGO, a creditor bank, or another entity.
Who Needs Life Insurance?
I can’t think of anyone who may not need life insurance: anyone who has payment obligations for mortgages, personal loans, a partner, children, or dependents who depend on their income in entire or in part to meet their needs.
What if I Don’t Have Family Responsibilities or Loans?
Have you thought that life insurance can cover you for possible disabilities? Then, you will be the beneficiary with a capital that will help you maintain your standard of living if you can no longer work for health reasons. If you are from that small part of the population in this situation, perhaps your parents need help in their old age, and you are not there to provide it.
Can I Have More than One Life Insurance?
Yes, you can have as much as you need, each for the amount, term, premium, and beneficiaries you decide.
It is usual to have life insurance that covers the outstanding amount of the mortgage. In this case, the beneficiary is usually a Bank Entity. Still, you can also take out life insurance that guarantees your children’s studies and another that can generate income to complement widows’ and orphans’ pensions.
What if I Have Enough Money and Don’t Need Life Insurance?
Life insurance has many more advantages in addition to financially protecting the family. You can use it to create an inheritance since it can be self-settled independently of the rest of the hereditary mass. The beneficiaries will always receive the insured capital.
You can also leave an estate with life insurance to people other than the heirs.
If a Person Has No Income, Why Take Out Life Insurance?
Not doing paid work does not mean that your contribution to the family does not have an economic value. A person dedicated to caring for children and the home does an essential job; hiring people to do that work is costly if missing. And the life insurance compensation could serve to cover that need.
If you have debts, life insurance is ideal for preventing the heirs from having to bear them in the event of death. In addition, life insurance always covers obligations, even if the heir renounces the inheritance.
Can My Company Take Out Life Insurance for its Workers?
Yes, then the figure of the policyholder comes into play, who is the one who signs the contract and assumes the payment obligation, which is different from the Insured, who is the person whom the insurance protects.
For example, within the social benefits it gives its employees, your company can take out life insurance in their favor.
Can a Bank Force Me to Take Out My Life Insurance with Them?
Not; the law supports you in this regard. You can get life insurance from the insurance company of your choice. Remember that a comparative study of risk life insurance premiums, carried out by INESE, indicates that life insurance contracted with a bank can be up to 42% more expensive than with an insurance company.
Will I Have to Have a Medical Examination?
It is not usual, but it is possible that depending on the age and the capital you want to contract, the insurer requests a medical examination before signing the policy. In this case, the insurance company usually assumes the medical examination and tests cost.
Does Life Insurance Deduct Tax?
The life insurance linked to the mortgage deducts up to 15% of the premiums, the amounts destined to pay the mortgage, and the maximum limit of $9,040/year.
The conditions to deduct taxes are that the mortgage loan is for the primary residence, the acquisition is before 2013, and the beneficiary is the bank.
If you are self-employed, you can subtract, in the form of a reduction on the income tax base, the life insurance premiums that contingencies of death, permanent disability, or total disability up to a maximum of $500 per year.
How Would I Know if a Family Member had Life Insurance?
All you must do is request the information from the Registry of Death Coverage Contracts, which depends on the Ministry of Justice. This registry allows queries through three channels: online, in-person, or mail. Access here to find out all the deadlines and documents.
How is Life Insurance Compensation Taxed?
If you have been the beneficiary of life insurance contracted by another person, the amount to be received will be taxed through the Inheritance and Gift Tax. Depending on the Autonomous Community of residence and the relationship between beneficiary and policyholder, there are essential deductions of a specific nature. In addition to the ordinary deductions of inheritance tax, a total exemption may occur in the most common cases.
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