People insurance can be divided into life insurance and accident insurance, sickness and healthcare and deaths.
Life insurance is contracted in order to alleviate the unfavorable economic impact that circumstances that affect the life of a person can produce. For example, a person can subscribe to life insurance so that, if he dies, his children will not have financial problems; or a worker subscribes to a retirement insurance so that when he retires his total income will not decrease.
There are three basic types:
- Insurance for survival: in exchange for the collection of a premium, the insurer is obliged to pay a certain amount (insured sum), if the insured lives on the date fixed in the contract.
- Insurance in case of death: in exchange for the collection of a premium, the insurer is obliged, in case of death of the insured, to pay the beneficiary a certain amount (sum insured).
- Mixed insurances: they combine, in a single contract, a benefit for death and another case for survival.
Among the variables with the greatest influence on the price of the insurance (premium) can be cited the age, the state of health of the insured and his profession. The people who represent the greatest risk, such as people who smoke, those who have dangerous jobs or those who practice risky sports, pay premiums that are higher than the average.
When a person contracts life insurance, the insurer in the initial moment must perform a risk assessment, which usually consists of subjecting the person who hires the insurance to a questionnaire about their health. Regarding the answers to this questionnaire, it is important to highlight the importance of what is stated in it, since if it is inaccurately answered or data omitted, the insurer, in the event of the contingency, may even be exempted from paying the benefit if he mediated fraud or serious fault in the statement. In addition, on some occasions, the insurer requires the performance of a medical examination prior to the signing of the insurance contract. Within life insurance, special mention should be made of the following modalities:
They are life insurance in which the policyholder assumes the risk of the investment.
The eventual yield (positive or negative) inherent in this insurance derives from the fact that the premium is invested in investment funds and/or securities that the insured chooses among those offered by the insurer. The policyholder has the possibility to change the securities or the investment fund associated with their policy.
The subscription of this type of product entails risks since, in case of negative yields of the values in which the premium is invested, the losses are assumed entirely by the policyholder. Therefore, when choosing the investment, the level of risk that the policyholder is willing to assume must be taken into account, and past profitability does not ensure future profitability.
The retirement insurance
Retirement insurance is a mixed life insurance (that is, it combines a benefit in the event of death and another in case of survival) that are intended to constitute a long-term insured capital through the payment of periodic premiums. The benefit can be received in the form of capital, temporary rent or annuity.
In this type of product, there are no limits regarding the amount of the premiums and they can enjoy full liquidity, generally starting from two years, if it is foreseen in the contract, although the insurers penalize for the anticipated disinvestment (rescue) of these products. Do not wait until the legal age of retirement, to be able to exercise the right of rescue.
Insurance Plans Insured (PPA)
The PPAs are life insurance intended to constitute a capital that is perceived at the time of the contingency established in the contract. The contingencies covered will be only those foreseen in the regulations governing plans and pension funds: retirement, death, permanent incapacity for work (total for the usual profession, absolute for all work and great disability) and dependence. However, the main coverage is retirement.
Its legal and fiscal regime is similar to that of individual pension plans (see the final section of this section). That is, the premiums paid are reduced in the taxable income of the IRPF of the same year, up to the maximum limit of the lower of the following amounts:
- $ 10,000 per year ($ 12,500 for people over 50)
- 30% of the total income of the insured, including work income and income from professional activities (50% for people over 50)
This limit is joint for the sum of all contributions (including contributions from the promoters) to the different social security products: pension plans, PPA, social welfare plans, mutual’s of professionals on their own account or of employees. And dependence insurance.
The benefits that are charged in retirement are taxed as work income.
Its operation and characteristics (covered contingencies, a form of receiving the benefit, illiquidity, and exceptional liquidity assumptions) are also similar to those of the pension plans. The difference between the two products is that the PPA offers a guaranteed technical interest rate. The law allows mobilizing the economic rights of a pension plan and a social welfare plan to a PPA and vice versa without penalty.
Individual Systematic Savings Plans (PIAS)
The PIAS are also life insurance that seeks to channel long-term savings to accumulate capital that serves as a complement to retirement. They are individual insurances of long-term savings, whose purpose is to pay premiums to constitute an insured annuity, which may be collected from an age indicated in the contract.
From the fiscal point of view, unlike pension plans and PPAs, the premiums paid do not reduce the taxable income of the IRPF and therefore do not have tax benefits during the saving stage. On the other hand, when the benefit is collected as a life annuity, the income generated (the difference between the value of the income at the moment of receiving it and the sum of the premiums paid) are totally exempt from taxes, provided that the following requirements are met:
- The collection of the rent must begin at least ten years later than the payment of the first premium.
- The policyholder, the insured and the beneficiary must be the same person.
- Premiums paid cannot exceed the following limits: $ 8,000 per year and $ 240,000 total.
Another distinguishing characteristic of the PIAS is that their enjoyment is not linked to the assumptions of retirement, incapacity for work, death and great dependence, as it happens in the pension plans and in the PPAs. This means that you can start collecting the rent without waiting for the legal age of retirement, although you must have passed the minimum term of 10 years from the first contribution for your enjoyment.
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Other people insurance
They ensure certain circumstances or contingencies that may affect the physical integrity or health status of people.
- Accident insurance: In the accident insurance, in exchange for a premium, the insurer is obliged to pay, to the beneficiary of the insurance, a certain amount (insured sum), in case the insured suffers an accident that causes his death, a permanent disability or a temporary disability. The amount of compensation and the cases in which it is paid will be determined in the policy and will vary according to the insurance contract.
- Health insurance and health insurance: Covers the risk derived from the insured’s illness and distinguishes between:
- Sickness insurance: In exchange for the payment of a premium, the insurer is obliged, when the insured person is sick, to reimburse him the whole or a percentage of the expenses of medical and pharmaceutical assistance. It can also be agreed that the insurer will indemnify you with a certain amount that usually consists, in case of permanent disability in a single payment and in case of temporary disability, while you are in such situation, in a daily or monthly rent.
- Healthcare insurance: In exchange for the payment of a premium, the insurer undertakes to provide health care benefits to the insured, in accordance with the conditions agreed in the policy.Normally, the insured can choose where to receive healthcare within a closed list of centers and medical professionals.
- Death insurance: Death insurance is the one for which the insurer, in exchange for a premium, undertakes to provide the insured with the burial services provided for in the policy or to assume the amount when the death occurs within the insurance coverage period.
Depending on the cases, the services may include the coffin, transfer, crowns, religious assistance, burial, tombstone, obituary and administrative processing. The payment of the equivalent can be foreseen in the cases in which some of these services cannot be rendered by force majeure or resignation of the interested parties.