Everything you need to know about life insurance in new post by OTP Osiguranje. If you need clarification of key terms you can always visit our FAQ page.
What is life insurance?
In everyday life we rarely think about the worst that can happen. Further, almost never we think – what comes after? How to provide financial security of my family? How to make life of my loved ones easier in the difficult times that are coming? Classic life insurance, also called risk life insurance, represents right way to protect your family. By paying insurance premium, you give them right to disbursement of insured sum in case of unwilling events, namely death. Close family members as legal heirs are most often insurance beneficiaries, but you can also specifically name the person you want to secure in case of your death.
How insured sum is being calculated?
Insured sum, meaning the amount of money that is paid out to beneficiary, depends on sex, age, premium amount, health of the insured person, duration etc. All these factors influence the risk assessment of the chance of death – for example young and healthy woman in her 20s carries far lower risk than man in his 60s. Thus insured sum for disbursment will be higher in first case than the latter. At the time of contracting, all these factors are taken into account and specific insured sum is calculated for the person whose life is being insured.
What is premium and how long the insured period lasts?
Insurance premium is the money you pay in order to be life insured. You can choose the amount, as well as the paying dynamics: monthly, quarterly, semi annualy, annualy or at once. You can also choose insured period – from 1 up to 40 years. Based on chosen premium amount and period, together with all the factors mentioned above, your insured sum is being calculated. The calculation can also be reversed – if you want precise insured sum, Insurer will calculate the necessary premium for it.
What happens if death doesn’t ocurr?
On the day the policy expires, the insurance is no longer valid and premiums paid are not refundable. This means that in case you live through the expiry date or the death ocurrs after the expiry date, no funds will be disbursed to the beneficiaries. On the other hand, there is life insurance with saving element – after the expiry date insured sum (in case of survival) plus interest and profit share is paid out to you as insured person.
How to choose best insurance for myself?
Today there are plenty of different options and it is a real challenge to choose the best one for yourself. More people opt for combined product because of the saving element, but also for risk life insurance having in mind the higher insured sum in case of death. In order to make the right decision, answer several questions: What is more important for me – saving or strong financial support for my loved ones in case of my death? How much per month/year I can pay for the insurance? For how long I want to be insured? Do I need additional benefits during the policy lifetime? Do I need support in case of health issues? Is it important for me to get funds back in case of survival?
Once you have outlined your needs, you can easily understand different insurance products in Serbia. OTP Osiguranje offers two types of classic life insurance – risk life insurance and life insurance with saving element. First one emphasizes protection of your loved ones in case of unwilling death, while second one is focused on stable savings.
What else do I need to know?
Age of the insured person is most important aspect of the insured sum so have in mind that the best moment for contracting insurance policy is now – the older you get the lower insured sum will be for the same premium amount. This also means that it is better to choose longer insured period, than to contract new policy after five years with lower insured sum since you are older.
You should also pay attention to the additional insurance often combined with life insurance: it offers you additional protection and benefits namely during the insured period, but insured sum in case of death is lower. Talk with your family and friends, exchange your thoughts and you will come to what is most important for you – and life insurance is there to protect it.
If you have questions or something is not clear enough, feel free to contact us – we will gladly respond!
Author: Bojana Tucović, Data Analysis and Digital Channels Development Specialist, OTP Osiguranje