Life insurance explained
How to choose the right type of insurance
Life insurance guarantees the payment of a set sum to your loved ones in the event of your death, but it can also be used to build up your assets over the long term. There are different types of life insurance:
- Death insurance: this contract guarantees the payment of a capital or annuity to designated beneficiaries in the event of the insured's death.
- Life insurance: the insurer only pays out if you are still alive on the specified maturity date
- Endowment insurance: this type of contract combines protection with savings. In all circumstances, life or death, a capital sum will be paid to you or your beneficiaries.
How to choose the right sum insured
The sum insured depends essentially on your personal situation, and therefore on various factors, such as:
- the number and age of your children
- current expenses
- existing loans
- other family income or
- available savings
In contrast to a couple without children, young families often need more extensive protection. In general, a death coverage equivalent to three annual incomes is considered a sensible starting point.
When it comes to savings, it's primarily up to you to decide how much you want to save, based on your plans, or how much you're prepared to save on a regular basis.
How to choose beneficiaries
The beneficiary is the person entitled to the capital, the one who will receive the saved amount:
- In the event of the insured's survival, it is often the policyholder himself, the one who took out the contract and saved the amount.
- In the event of the insured's death, it is a third party who will receive the capital. The designation of this person is often emotionally charged.
The choice of beneficiaries is solely the responsibility of the policyholder, and no one else is authorised to make changes in this regard. This designation may be made at any time, either when the policy is taken out or during the term of the contract. The policyholder is free to choose or modify beneficiaries as often as desired, free of charge.
Usually, beneficiaries are chosen from a traditional devolution, often the partner or the children. It is advisable to deviate from this stipulation only if it is not suitable!
In this case, there are two forms of designation:
- Nominative, specifying the beneficiaries
- Qualitative, defining a role (such as spouse or children) without mentioning their names.
A nominative designation must be checked regularly to reflect the current situation, whereas a qualitative designation evolves without modifying the contract. For example, in case of remarriage, the new spouse becomes the beneficiary.
You can easily check the beneficiaries of your Life Insurance in LALUX’s easyAPP. Make sure to verify that the individuals you've selected to receive benefits are still in line with your preferences, particularly in the event of marriage, divorce, or the joyous arrival of a new family member.
With these tips, you avoid putting your loved ones in difficult or uncomfortable situations.