Life Insurance

Why should we take out life insurance?

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There are many reasons why you should take out this type of policy. Below are some of the reasons why you should contract life insurance:

1. Traffic accidents

Traffic accidents are one of the main causes of unnatural death and disability in Spain. In 2019, some 1,098 people lost their lives on the road.

Although in principle life insurance only covers compensation in the event of a person’s death due to natural causes, it is possible to include an additional clause in the policy that also covers the damages resulting from any type of accident.

2. Cover the expenses after the death of the person.

The death of a person can lead to a series of unexpected expenses, which, in some cases, families cannot afford. One of the main reasons to take out life insurance is to cover these expenses.

On many occasions, the death of a person is unexpected, and you may not have foreseen the costs stemming from this situation.

Life insurance policy covers burial or cremation, and in some cases, if stipulated in the policy, it also covers other debts that the insured may have before dying, such as loans.

3. Cancellation of a mortgage

One of the main reasons why it is important to take out a life insurance policy is the possibility that, in the event of the death of the insured, the possibility of settling the mortgage exists, freeing the family from this financial burden and thus securing the ownership of the home.

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The death of a person can cause serious emotional and financial difficulties if he or she was the main source of income for a family. Nowadays, many banks offer better loan conditions on a policy taken out if it is associated with a life insurance policy.

4. Covering damages resulting from disability or serious illness

This type of policy serves as a guarantee if the insured person suffers an accident that totally or permanently disables them.

A disability can leave a person without work or with very high expenses to cover, so taking out a life insurance policy that includes disability cover can be very advantageous.

Another reason why it is so important to take out a life insurance policy, as having a policy of this type will allow you to cover all the expenses that may arise in the event of an accident.

The same applies when a person is diagnosed with a serious illness. This situation may be covered by the insurance policy; accordingly, the insured will be able to guarantee the possibility of maintaining a certain quality of life.

5. Inheritance tax

In Spain, after the death of a person and in order for the heirs to access their inheritance, they must pay inheritance tax.

Depending on the Autonomous Region of Spain, the amount levied may vary, or even be exempt from payment. However, on many occasions the amount is considerable and people are often forced to renounce their inheritance.

Those who have a life insurance policy do not have to worry about paying inheritance tax, as the amount of compensation received by the beneficiary can be used to pay this tax.

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6. Family insurance

When an individual takes out a life insurance policy, they must choose the beneficiary or beneficiaries who will receive the compensation or annuity that has been agreed with the insurer in the event of death.

Sometimes families are financially dependent on a single person; for this reason, many people take out life insurance to reduce the financial impact that their death could have on their family or close relatives.

Life Insurance in Spain

7. The self-employed

If a person suffers an accident and is unable to work, this unfortunate situation may be further exacerbated when the person who suffers the accident is self-employed.

If you are self-employed and considering if life insurance is necessary for you, the answer is that it is essential, as, in the event of illness or accident, you will be able to rely on an income and maintain a sound economic position.

Many professionals take out life insurance because of the work they do, and professional associations even tend to encourage their members to take out this type of policy.

If you are wondering how much life insurance costs and if it would be beneficial for you, the easiest way would be to contact BMI, Insurance Broker in Spain for Expats; we will provide you with competitive prices obtained from the main insurance companies and advise you under no obligation in order for you to find the policy that best suits your needs.

For more information, do not hesitate to contact us; we will be delighted to assist you.