Signing a personal loan usually implies the payment of higher interest and some conditions such as contracting Life Insurance such as MAPFRE . This is not a mandatory condition, as is the case with mortgage loans , but some entities do not grant financing if the client does not contract any of these products.
The legal framework and the current situation
Legally, an entity cannot force a client to take out life insurance to grant a personal loan. This obligation, which protects the entity in the event of the holder’s death or permanent disability, only exists in the case of mortgage loans .
According to the Mortgage Market Law, “mortgaged assets must be insured against damages for the appraised value”, as is the case, for example, of fires . In any scenario, it is advisable to know the terminology of the insurance sector correctly.
However, despite the fact that there is no legal obligation, not contracting life insurance may imply that the bank does not directly grant the requested personal financing . Or, in the event that it does, the interest on the loans will be much higher than what the credit would have with the contracting of this product. That is why it is recommended that the client “negotiate” the conditions with the financial institution from which they are requesting the personal loan.
Some banks and financial firms, however, do not force their clients to take out life insurance, and also offer relatively affordable financing conditions . Therefore, it is advisable to “track” the market well.
Advantages if you have life insurance
The entities offer some interesting bonuses on our personal loan in the event that we take out life insurance, but it is worth reviewing some of these aspects carefully:
- The single financed premium (PUF):The insurance fee is added to the loan, which has an impact on greater comfort. However, this financing of the product implies an increase in the price of the product, since it will be cheaper if we pay it in a single payment.
- If we repay capital early, the single premium insurance is not an option, since what we do not consume will be received by the bank. We won’t get it back.
If the life insurance renewal is annual and we do not do it, the interest on the loan will increase. Usually, renewing this insurance is what marks the bonuses that the entity applies to personal financing. If this does not occur, the advantages disappear.
Can the increase in the retirement age be rejected
The possibility of rejecting or not the increase in the retirement age arises from the year 2013. On this date the pension reform took place, which established a progressive increase in the conditions to access retirement until 2027.
In this transitory period, the ordinary retirement age goes from 65 to 67 years , provided there is a minimum contribution period. Within this context, it is possible to continue working beyond that time, although a large percentage of Spaniards are reluctant to this increase in the retirement age.
Is it possible to retire earlier?
To access ordinary retirement and receive a pension equivalent to 100% of the regulatory base, it is necessary to meet the above requirements, especially in relation to the contribution period. However, there are two formulas that the worker can take advantage of if he decides to reject the increase in the retirement age.
Retire early through early retirement
To retire from work activity through the early retirement modality by the will of the worker, it is necessary to prove the following conditions:
- Be less than two years old, at most, at the applicable age in each case.
- Being in a situation of discharge or assimilated to discharge.
- Have a minimum effective contribution period of 35 years, within which at least 2 years must be included within the 15 years immediately prior to the time of application.
If the increase in the retirement age is rejected and this formula is followed, the amount of the pension varies according to the following parameters:
- The listed years.
- The reduction coefficient that is applied based on the time that the worker lacks to reach the legal retirement age.
- Retire early through partial retirement.
This is another option that allows you to reject the increase in the retirement age in order to receive the public pension earlier. This type of retirement is one that begins after reaching the age of 60 , but that is combined with a part-time employment contract. Depending on each case, it may be linked to a relief contract with an unemployed worker or who has a fixed-term relationship with the company.
To retire early in this way, a relief contract must be entered into and the following requirements must also be met:
- Have been employed full-time.
- Be at least 60 years old.
- The reduction in working hours must range between 25% and 75%.
- Evidence of a minimum contribution period of 33 years or 25 years in the case of people with disabilities.
- Have been with the company for at least 6 years, which must be immediately prior to the date of partial retirement.
In any case, more and more people are deciding to contract a pension plan due to ignorance of what could happen in the future.
What is the best life insurance
Over the years, multiple events can occur that jeopardize the domestic economy. Death, as well as a situation of disability or dependency, are the most common cases for which a person decides to subscribe to the best life insurance .
Thanks to life insurance , the risks included in the contract are covered up to the maximum insured capital for each claim. Depending on the event that occurs, the beneficiary may be the insured himself or other persons if his death occurs.
Life insurance comparison
Before choosing the best life insurance, it is necessary to define what you want to protect. Since there are different modalities (personal, mortgage amortization , loans, etc.), needs must be prioritized and a product according to them must be contracted.
In addition, it is important to take into account the present circumstances and the possible future scenarios to add coverage according to each case : if it is a person only, if there are small children, if you are working or retired, if you have outstanding debts, if you works in a profession considered risky…
Extra coverage in life insurance
Despite the fact that the main coverages are death of the insured due to any cause, absolute and permanent disability, or severe dependency and great dependency, the best life insurance covers others. The complementary guarantees that can be found are:
- Serious illness of the insured’s children.
- Invasive breast cancer in which case the payment of a fixed capital is guaranteed.
- Invasive prostate cancer where the previous compensation also applies.
Waiting periods in life insurance
As in most policies, the best life insurance also usually establishes a grace period. This concept refers to the time that elapses from the contracting to a specific date during which some of the coverages are not effective.
Said period must be clearly specified in the contract, as well as the start and end date of each guarantee . Therefore, the insured must be informed in detail of the deficiencies established by each insurance and its characteristics to assess whether these conditions meet their needs or not.
The capital insured in life insurance
The insured capital is the benefit established in the policy that the insurer pays in the event of a contingency contemplated in any of the covered guarantees. Before purchasing life insurance, it is essential to read the fine print to ensure that the amount will not be reduced when the insured reaches a certain age. You can also choose the way to collect this economic compensation, either in a single payment or periodically.
It should not be forgotten that this type of insurance is usually subscribed for a renewable year and its renewal occurs automatically at the expiration of each annuity, unless expressly notified by the insured or the company. In some policies it is allowed to split the payment of the premium and it is even possible to subscribe temporary insurance to cover specific risk situations.
Life insurance exclusions
Even the best life insurance has a series of exclusions. For this reason, the real scope of the coverage that is being contracted must be checked in order not to find yourself unprotected when something happens.
In most cases, certain risk professions are not considered , as well as some causes of death and disability. Other cases are also excluded, such as those produced by armed conflicts, those derived from nuclear energy, those produced by some natural phenomena, those that are the consequence of a catastrophe or calamity, etc.
Tips to choose the best life insurance
There are many reasons to take out life insurance: protect the family when the insured dies, shield a mortgage loan, guarantee the studies of the children or get a return on savings, among many other factors that invite us to know which ones These are the 5 tips to choose the best life insurance .
Once we have decided to take out life insurance, we should not jump at the first offer we find. First, we must know what our needs are in order to design our insurance coverage well, as well as to know what the insurance company is offering us.
- We must look for insurance that allows us to choose the coveragethat interests us the most.
A policy that provides security to the family in situations where the ability to generate income is lost or reduced.
- Know the different contracting modalitiesthat exist.
A Life Savings insurance is not the same as a Life Risk insurance. Life Risk insurance is intended for those who want to grant an economic amount to their family on the day they die, while Life Savings is the product indicated for those who want to be the beneficiaries of their Life insurance and collect an income when it expires
- Protect your family against the unforeseen.
Some experts recommend that the sum insured for coverage be equivalent to your family’s basic expenses for between three and five years, which is the time it would take your dependents to break even in your absence.
When life insurance is purchased, it is possible to designate one or more beneficiaries. If more than one is designated, it is necessary to decide how the money will be divided. It is possible to choose a secondary beneficiary to receive the insurance amount if the primary beneficiary dies before the insured.
In addition to these tips for choosing the best life insurance, it is convenient to know the types of policies that exist. It is also essential that life insurance be flexible in order to adapt it to our present and future needs.
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