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Is it worth taking out life insurance?

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Life insurance is paid in the hope of never needing it. So is life insurance worth it? The data show that it is, since this type of policy helps thousands of families in Spain every year for a very low price per year.

Life insurance has a very simple operation. The insured pays in exchange for the fact that, if something happens to him and he dies, the company compensates his beneficiaries with a previously agreed amount (80. 000 euros, 150. 000 euros…). They can also be made so that the money is received by the insured himself, in case he has to request a disability.

A policy that provides security

Thus, these policies are always made as a preventive measure. According to data from the National Institute of Statistics (INE), there is little probability of dying when we are young. For example, the probability of dying with 20 years is less than 0 ,21 Come in 1000. And that of dying with 45 years, of only 1 between 1000. These policies, although it is unlikely that they will have to intervene, give us a lot of peace of mind ; For that reason alone, it is worth taking out life insurance.

In 2018, in Spain there were close to 20 millions of people with risk life insurance , that is, they will receive compensation if they die. These types of policies are used more when there is a mortgage, so that the family can pay off the loan if any misfortune occurs. In fact , every year some 8400 families suffer a death or illness that makes it difficult for them to pay their mortgage ; of them, some 4800 have the protection of a policy to pay off that debt.

Is it worth paying for years?

However, there are those who will think that it is not worth paying for years for a service that they may never need. They may think that after a long time paying, it is possible that more has been given than is received as compensation. But can this really happen? The figures from Unespa, the insurance company, shed a lot of light on this matter and show that this possibility is very small.

According to data from 2019, only 3.9% of policyholders died after paying more than 30 years. On the contrary, 3 out of every 10 people with insurance of life they died less than 5 years after being hired . In other words: these policies are unlikely to be needed (fortunately few people die prematurely); But, in case that happens, it is worth taking out life insurance to help families.

Let's take some examples to see if it is worth taking out life insurance. Keep in mind that the prices of these policies vary according to the insured capital and age, so they go up a little with each passing year.

A woman of 30 hires 100. 000 euros per 46 euros per year. He pays it for 5 years and then he dies, when the fee was 57 euros per year. In total, you will have paid less than 300 euros and, in return, your beneficiaries will receive 100. 000 euros.

A man of 50 assures 190. 000 euros for 620 euros per year. He pays it for 8 years and then he dies, when the fee was 1180 euros. In that time, you will have paid some 7500 euros, but your family will receive the 250 . 000.

How to know how much money to insure?

Life insurance is worth taking out, even if it pays for several years. However, what is really important is that the money received by the beneficiaries is sufficient to meet the debts and expenses left by the deceased. Therefore, it is essential to know what capital to hire.

Broadly speaking, life insurance is worth it when it covers at least 5 years of full salary . That is the estimated amount that a family needs to recover financially from the death or illness of a member (remember that these policies can also cover serious illnesses or disability).

For example, if a person charges 25. 000 euros per year, at least you should ensure 125. 000 euros. To that amount you have to add the outstanding debts or loans to have a more realistic figure.

How to calculate the capital

To help you make numbers, you can use our comparator. In the section “Put the amount you want to insure”, there is a small option called “calculate it here”. This is all that the comparator will take into account to know how much capital you need:

– How much money is left pending on your mortgage. For instance: 80.000 euros

– Do you have other loans that you want to protect? A car loan, a loan for the children to study at university … Suppose they all add up others 50. 000 euros.

– How much money do you want your family to have per month. For example, 1000 euros.

– For how many years do you want to leave that monthly payment to your family. For example, for 5 years.

In total, and following the steps of the comparator, with the examples that we have put that person should hire at least 190. 000 euros.

Why it is worth taking out life insurance

In summary: the figures reflect that it is worth taking out life insurance. Nobody wants to think about death, that we cannot be there to see our children grow up or fulfill all the plans we had made. However, it is a real possibility, albeit a very small one. The price of life insurance is very low, so it pays to have it even for several years in exchange for the certainty that your economy and that of your family will be fine no matter what happens.