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Optimal care for your surviving dependantsTerm life insurance

No one likes to deal with death. Unfortunately, however, statistically one child in every school class in Germany will lose one parent before leaving primary school.
The affected family needs financial compensation for the loss of income after death. Those who must care for others (children, partners, relatives) must consider the possible financial consequences. This is the only way for you as a family to look toward the future with peace of mind.

In the event of death, term life insurance pays the agreed sum to the surviving dependants – irrespective of the term and amount of the premiums paid.

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The basics

If the breadwinner of a young family is incapacitated, often there is a risk of financial catastrophe. If the deceased has only paid in a small amount so far, the statutory pension entitlements are low – also where the provision for dependents is concerned.

Widow’s and orphan’s pensions are usually not sufficient to provide for the family after the death of a parent. In many cases, you should take out term life insurance. Especially if you take out a large loan (e.g. for construction financing). In the event of death, your relatives can then repay this loan with the benefit from the term life insurance.

For whom is this suitable?

At death of the main breadwinner of a family, economic calamity is often triggered by maturing loans that were taken out when the family was started. A term life insurance policy can at least protect against financial ruin.

Indispensable for young home builders

Term life insurance is particularly important for young families that have acquired residential property. Especially if they have children and minimal financial reserves. If both spouses earn income, joint term life insurance can also be effective. At the death of a partner, this pays the surviving partner the full sum insured. Compared to two separate policies, you save approximately ten percent.

Loan protection through residual debt insurance

Residual debt insurance is a special form of term life insurance. This allows you to protect precisely the amount that the borrower still owes in the event of his own death. This ensures that the remaining debt can be paid by the surviving dependants.

Scope of benefits

Unlike endowment insurance, term life insurance only pays if the policyholder dies during its term. For this reason, term life insurance policies are also considerably cheaper than policies with capital accumulation. In the worst-case scenario, your family will be financially secure starting with your first contribution payment.

Comparing prices is particularly important

The benefits offered by the various providers are virtually identical: If the insured person dies, the relatives will receive the amount agreed at the time the contract was entered into. If the contract ends during the insured person’s lifetime, no benefits are due.
Based the benefits, which for the most part are identical, experts recommend paying attention to a favourable price for term life insurance. As a thirty-year-old non-smoker, you already get risk protection of 150,000 euros for an annual contribution of less than €120. This will be paid out to your relatives in the event of death.

Medical examination

By signing the insurance application, as a rule you grant the insurer the right to verify the health data you have provided, with your physicians.

If there are numerous or serious pre-existing conditions, the insurer may require a risk surcharge. Or he may even reject the application altogether. The reason for this: The death risk of people with pre-existing conditions should not be applied to the community of those who are insured here.

Health information is reviewed and evaluated

Applicants, insurers and any life insurance intermediaries will each receive a copy of the insurance application. The health information is evaluated by a physician employed by the insurer.
If there are no problems, the insurance certificate will be issued. The life insurance cover then comes into force when the policy is issued to the applicant.

Individual contract or partner contract?

Some insurance companies offer not only endowment life insurance but also joint term life insurance. The latter insures two or more persons in a single contract. If one of the insured persons dies, the death benefit is paid to the survivor(s).

This can be particularly practical for spouses. But even business partners who operate a joint undertaking often share financial obligations. If insured appropriately, they can be repaid after the death of the partner without the remaining partner experiencing any financial problems.

Conversion is possible

Conversion into an endowment policy

Most life insurers grant you the following right: You can convert a term life insurance policy into an endowment life insurance policy within the first ten years of taking out the policy. Usually a new medical exam is not necessary for this changeover.

Those who desire to make additional provision for their old age can make use of this conversion right. Disbursement occurs after end of the contract: You receive the contractual maturity payment, including guaranteed interest and additional profit participation.
With endowment life insurance, you achieve two pension objectives simultaneously: Risk protection for your family and a good return on your savings.

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