To try to remember what life insurance is, we must know that it is a contract that covers or can cover the risk of death, survival or disability. That is, the risks that can affect existence and health. The contract is made between the insurer and the policyholder, the latter may also be the insured, or the insured may be a different person. The person of the beneficiary may also coincide or not, who is the one who is compensated by the policy.
Obviously, obtaining the protection that life insurance offers comes at a cost. However, this cost is determined by several reasons. Therefore, we want to show you how much life insurance costs and how much you can charge with it.
What is the price of life insurance?
When finalizing how much life insurance costs, you have to take into account various factors or criteria that are considered together with the form of payment of the policy, whether annual or fractional.
In every life insurance policy a capital is insured, so the amount insured will influence the amount to be paid for the annual premium. The relationship in this case is one of direct proportionality, since logically, the higher the sum insured, the higher the amount of the premium.
Another essential aspect to take into account is the age of the insured. In this case also the direct connection system since the premiums go up as the insured’s does.
In addition, the premium may vary depending on the time for which the insurance is contracted. At this point, we refer to the number of years for which it is an insurance contract.
Since it is a type of insurance that takes into account the existence and health of the person, other important criteria when determining the annual premium to pay are the health status of the insured, including whether or not they are a smoker, if you suffer from any kind of disease or disorder, etc. As well as, his job profession. It is especially taken into consideration whether or not the usual activities of the job are risky.
Taking into account all the factors that are necessary for calculating the premium, insurance companies make actuarial tables that allow them to put a price on the activity of insuring a certain risk, based on the frequency with which said risk occurs. for a large number of people.
That said, it should be noted that insurers do not use the same tables and, therefore, it is not possible to make an exact calculation of a premium. However, some average examples can be given to give the reader an idea of the amounts.
- If the insurer had an average age, of about 35 or 40 years, and was healthy (understanding by such that he did not suffer any type of disorder or disease), he did not consume alcoholic beverages, nor was he a smoker, to ensure an average capital, of about €35,000, the annual premium, based on the comparison between different offers, could be over €76.
- If the insurer were a person of about 50 years, with characteristics similar to those of the insured described above, and had the intention of insuring a capital of about €50,000, he could pay an annual premium of about €140.
As can be seen, a considerable increase in capital will also entail a considerable increase in the premium. But, in any case, the value of the premiums is achievable by a family with an average purchasing power, and the contracting or not of life insurance can be essential for the future of a family, in the event of the situations in question. coverage.
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