Set Up Your Life Insurance Correctly & Save💰

First of all, it's important to say that life insurance is not the same as savings.💡 The primary purpose of life insurance is to cover serious risks that we may encounter during our lives and thus cause a long-term dramatic drop in income. 📉 It's impossible to know in advance whether you'll have a serious injury, become ill, or be disabled. This means not being able to perform your profession for 100%, thus not being able to fully secure your family. 😔

Financial coverage at a time when a critical disability (or death) happens to the insured is the main purpose of life insurance. 🚑 If you're single or have no financial obligations, you do not usually have to deal with life insurance risks. We're mainly talking about the risk of death when no other person is dependent on you. 👨‍👩‍👦 But from the moment you start a family, take out a mortgage or rent a car, comprehensive life insurance becomes necessary to fully cover your financial needs and the needs of your family in the event of an unfortunate accident. ✅

There isn't a universal rule for setting up life insurance. However, there are general principles that will help you set up quality insurance correctly 👇

Short-term income loss💸

Life insurance should not primarily cover short-term income shortfalls of up to one to three months. ❌ For this purpose, it is good to set aside an amount each month, which will serve as an emergency fund in case of difficulties.🚨

Long-term income loss 💸

On the other hand, life insurance should always cover long-term loss of income, which can be caused by a serious illness or accident. 🤕 In this case, it is necessary to set the insurance sums correctly. They're usually divided between constant and decreasing.

What is the difference?

A constant variant of life insurance means, that you are insured for the same amount of money for the entire duration of the contract, therefore you pay the same amount. In the case of the variant with decreasing coverage, the sum insured will decrease over time. 📉 Choosing this option is good if you are repaying a debt or mortgage because its value also decreases over time. The advantage is that it is a cheaper variant of insurance.💰 Let's show you the most prominent risks, which life insurance should cover 💪

Disability 🤕

If your ability to work decreases due to poor health, you will be granted disability. 💔 It can be anything from an injury to a long-term illness. Depending on the degree of invalidity, you're granted an invalidity pension. 📊 The difference between the individual degrees of disability is usual in the decline in working capacity 👀 As for the insurance of this risk, the recommendation is that it is always good to combine a variant of a constant and a declining amount, which will cover the lost profit until retirement. 🧓🏼 Set the invalidity with a constant amount to at least the value of the annual income. The declining one should cover the costs until retirement. 🤗 At the same time, it is good to take into account that you will receive a disability pension and (depending on the degree of disability) you can still earn extra money. 💰

Serious diseases 🤒

Additional insurance in the event of serious illness provides financial assistance if you suffer from diseases like heart attack, stroke, cancer, kidney failure, vital organ transplantation, blindness, hearing loss, etc. 🧠 It's good to insure yourself for at least one year of income loss. Practically, count with an emotional recovery as well.

Permanent consequences 🚑

Additional insurance in the event of permanent consequences from an accident provides financial assistance if the damage is permanent.👨🏼‍🦽 We recommend that you set the insurance amount to cover all modifications of your household — wheelchair access, wheelchair, elevator, or specially adapted car and that you have enough money left to provide for your own financial needs and the needs of the whole family. 👨‍👩‍👦

Death ⚰️

It's good to ensure the risk of death whenever someone is dependent on you. 👶🏻 Usually, you can set a higher amount that will secure your family. It's advisable to set a constant coverage (in the amount of the annual income) and a decreasing coverage (in the amount of two annual incomes) and further increase it by the balance of your liabilities (for example, the amount of the mortgage that remains to be paid). ✅

👉 Life insurance is one of the more complex financial products. If you're not sure how to set all the risks correctly, contact your local comparator. 👈