Ensure your household finances are in good shape

We will you show some methods that can be used to secure your children's and relatives' financial future in the face of any unforeseen events

When you have a child, you are faced with a new concern: ensuring your financial future against any unforeseen event. All parents want their children have the financial solvency that will allow them to live comfortably if a situation arises that significantly reduces household income. You can guarantee that solvency in a number of ways: life insurance, accident insurance, pension plans or wills.

Life insurance products

Life insurance is a financial savings instrument intended to guarantee the protection of family members or whoever is chosen by the policyholder in the event of death. Therefore, taking one out is one of the best ways of ensuring the future financial stability of your children and family members.

If you already have a life insurance plan, it is important that you check the conditions to make sure it covers your children under all circumstances. You might also want to consider whether it is worth extending your life insurance to both parents, if it only covers one, to have broader coverage and therefore guarantee your children's financial future whatever happens.

BBVA Life Insurance Coverage

BBVA offers the possibility of taking out a series of life insurance products that not only guarantee a financial pay-out to family members in the event of the policyholder's death but, depending on the type chosen, can offer up to six coverages overall:

  • Death: in the event of the death of the policyholder due to any cause, the beneficiaries are paid out the insured amount.
  • Second opinion: allows you to seek a second opinion in the event of an illness more than three months after the initial diagnosis.
  • Death services: telephone help line, guidance, coordination and management of the funeral service up to €5,000.
  • Absolute permanent disability: this covers an irreversible physical situation that makes it impossible for the insured person to carry out any type of professional activity.
  • Cancer or heart attack: payment of the capital contracted in the policy in the event of a cancer diagnosis or heart attack.
  • Ten critical illnesses: bypass, organ transplant, blindness, burns, coma, multiple sclerosis, Parkinson's, Alzheimer's, chronic lunch disease and stroke.

Accident Insurance Policies

Another way of guaranteeing the financial stability of your children is by taking out accident insurance.

This is insurance that cover various circumstances established in the policy, such as total and permanent incapacity or death. It also indemnifies the insured party if they are hospitalized after an accident. This way, the recovery period will not harm the family finances and you won't be overwhelmed by outgoings while you are unable to work (since your salary will be partly but not fully covered by Social Security).

Accident insurance is cheaper than life insurance.

BBVA Accident Insurance Coverage

BBVA Accident Insurance offers two main categories of coverage: for death and for hospitalization.

Death coverage is divided in three subcategories, which in turn offer different indemnities:

  • Death of the policyholder as a result of accident: indemnifies beneficiaries named in the policy (can be children) with €25,000 if the death occurs with two years of the accident occurring.
  • Death of the policyholder due to a road traffic accident (double capital): compensation is €45,000.
  • Death of a spouse due to a road traffic accident (triple capital): compensation is €67,000 if the death is the result of the same road traffic accident in which the policyholder dies, and the death occurs within one year of the accident.

Coverage for hospitalization in the event of accident is €11.25 daily from day one for hospitalizations longer than 96 hours, up to 365 days after the day of admission.

Pension Plans

Although a pension plan is a financial savings product intended to boost state retirement pension, it can also be used to guarantee the financial stability of your children. This is because a pension plan you can be redeemed in the following instances:

  • Retirement of the pension holder.
  • Long-term unemployment.
  • Permanent or severe incapacity of the pension holder.
  • Severe illness of the pension holder or their direct dependent.
  • Death of the pension holder.

It is most notably in this last instance, of death of the pension holder, where it is most useful to secure the financial future of the children. In the event of death, the pension plan beneficiaries are those appointed by the pension holder. If no-one is allocated, they will be the legal heirs, namely the spouse and children. Nevertheless, when taking out a pension plan it is advisable to include your children as beneficiaries in the event of your death, as way of ensuring that they receive the money.

Moreover, pension contributions are tax-deductible.

Will: characteristics, advantages and types

Writing a will is one of the more common and traditional ways of guaranteeing your children's financial future. A will is a legal document that instructs how to distribute money, property and shares of the testator.

In addition, in the will the parent can name who will be the trustee of the children's assets until they reach legal age, and who will be their legal guardian if both parents die. If it is not specified, it will be decided by the courts, so it is important to include it. Before writing a will, it may be useful to know the different types available, to choose the most suitable:

Open will

Made in the presence of a notary public, as follows:

  • Go to a notary and identify yourself with your ID document.
  • Express your final will and testament to the notary public. In other words, you explain to them how you want to distribute your estate. This step can be done in writing or orally.
  • The notary will then elaborate the will, adapting it to legal formalities.
  • Once written, the notary will read the will, and the testator will sign it to express conformity. 

Holographic will

This type of will is not made in the presence of a notary public and does not need to be given to one for safekeeping. For these reasons, the Civil Code establishes certain requirements for it to be valid:

  • It has to be written in its entirety by the testator.
  • It must be written by hand, and never mechanically such as on a computer.
  • The testator has to use a pen; it will not be considered valid if it is written in pencil or any other means that can be erased. The paper used must be a normal folio.
  • The date (day, month and year) of composition must be stated.
  • Any crossings out or writing between lines will not be considered valid. Any directive that such writing may contain is treated as though it were never written.
  • At the end, the testator's normal signature must be rendered.

Closed will 

The last type of will is a hybrid of the open and the holographic will. To be valid, the following steps must be followed:

  • The testator elaborates the will by hand or typed; both mechanisms are valid.
  • The testator goes to the notary with his or her identification document.
  • The will is delivered to the notary in an envelope, indicating whether it is handwritten or typed.
  • The notary formalizes a certificate of delivery and reads it.
  • The testator and the notary sign the certificate of delivery and the notary takes custody of the will without reading its content.