What types of life insurance plans are there?

We explain how many types of life insurance plans exist and which may be the most suitable depending on the circumstances.
More and more people are choosing to take out life insurance. In fact, it is calculated that up to 50% of Spaniards have one. Whether for peace of mind in the face of unforeseen events or for premature death or disability, life insurance guarantees the protection of loved ones in the event that they no longer have a main source of income. However, there are three classes of life insurance, and each one offers a series of different benefits. Some of these benefits include greater financial security and peace of mind for enjoying a carefree retirement. In this article we outline the three types of life insurance: death or risk insurance, survivorship insurance and mixed insurance.
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Death or risk insurance

Risk insurance includes the payment of compensation in the event that the insured person dies or suffers a disability in accordance with the provisions of the insurance contract. Payment is made, in accordance with the provisions of the insurance contract, after this situation is substantiated and is subsequently resolved. This type of insurance is usually taken out with the aim of protecting the financial stability of the insured person's relatives.

In addition, there are two types of risk insurance plans: term life insurance and whole life insurance. The premiums usually last for a year, after which you can choose to renew it or not. On the other hand, life insurance covers the insured person until he or she dies. in any case, for term life risk insurance, the capital paid at the end of the stipulated term can be fixed, increasing or decreasing; for whole life risk insurance, the capital is always fixed.

Finally, another difference between these insurance plans is the premiums. For term insurance policies, premiums can be renewable, where they increase over time, or fixed, where the same amount is paid throughout all terms. As for life insurance, there are also two options in terms of premiums: whole or term. In the first case, a regular payment is made until the insured person dies; in the second case, payment is made during a fixed period, although coverage extends until the death of the insured person.

Survivorship or savings insurance

Another very common type of life insurance is savings insurance, through which the policyholder receives a capital payment at the end of an agreed term, provided that the insured person does not die beforehand. This type of insurance is usually taken out with the aim of complementing retirement benefits, although in many cases it offers a series of savings and, jointly, protection against unforeseen events or a sum of money to be left to the policyholder's beneficiaries.

Mixed insurance

On the other hand, what happens if a person wants to have an insurance policy that guarantees the payment of a benefit to his or her beneficiaries in the event of death yet also wants to have a retirement savings plan? In that case, the best decision would be to contract what is known as mixed insurance. This type of life insurance combines the advantages of a risk insurance policy with the benefits of a savings insurance policy. If the policyholder dies before the agreed term, the beneficiaries will receive compensation; if the policyholder lives beyond said term, he or she will receive a payment.

This type of life insurance is one of the most comprehensive. Furthermore, the typical maturity date of a mixed insurance policy coincides with retirement, meaning the entire working cycle of the insured person is covered.

Which insurance is the most appropriate?

It is never too early to start thinking about life insurance, although it is true that each person is in a unique situation and has different needs. While risk insurance prevents any unexpected accident or event in accordance with the provisions of the policy, savings insurance is a simple and easy way to save for the future. For this reason, in most cases, mixed insurance is the preferred option, as it offers the benefits of both types of life insurance.

Many people question whether life insurance is really necessary or not. Normally, people don't usually start thinking about taking out life insurance until they have a family and obligations, such as mortgages or children in school. Nevertheless, as we said before, life insurance is not only useful as a safety net following the death of the main financial contributor of the home, but also as a way of saving.

Finally, it is important to keep in mind a number of things when you make the decision to take out life insurance. On the one hand, the financial capacity of the policyholder to pay the premiums during the established period must be taken into account; in some cases, as with risk insurance, the policyholder may be able to recover the premiums that have already been paid. On the other hand, it must also be taken into account that in most cases the price will increase as the age of the insured person increases.

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BBVA life insurance

If you are considering taking out life insurance, the BBVA Group has a wide variety of insurance options with excellent compensation for death or accident, as well as remarkable coverage in the event of illness. Take a look at the options at bbva.es and start preparing for tomorrow's unforeseen events today.
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