There are several modalities that you will find when researching the types of life insurance, such as ordinary, pure dotal and mixed dotal. With so many options on the market, there may be questions regarding how it works and coverage.
In addition, they also have differences in relation to the payment of compensation. While some are due in the event of the death of the insured, in other types it is paid if there is survival within a stipulated period.
After all, which one is worth it? To better clarify this matter, below you will learn regarding mixed endowment life insurance and how it works!
What we will see in this article:
What types of life insurance?
As you already know, there is more than one type of life insurance. The first one is the ordinary one, better known to people and with a simple operation. In it, the insured pays a premium to the insurer, usually monthly. In turn, the beneficiaries will be entitled to receive compensation if the contractor dies. In this scenario, the premium is paid indefinitely.
Life insurance with limited payments works in a similar way. However, the premium will only be paid during a period defined in the life insurance policy. At the end of this period, it will no longer be necessary to pay the premium, and the right to compensation remains.
In turn, temporary life insurance is contracted for a certain period. Thus, the contractor will be insured during the stipulated period in case of death. However, at the end of the term without death, there will be no right to compensation.
Another type of life insurance concerns pure dotal. In it, the premium is also paid for a period determined in the contract. With this, the parties stipulate a deadline and, if within that time, the insured survives, there will be payment of compensation by the insurer.
How does mixed endowment life insurance work?
Mixed endowment life insurance combines the characteristics of temporary with pure endowment. In this way, a period of payment and coverage is stipulated, then the compensation will be due in case of survival or death. The operation seems a little complicated, but you will understand all its details. So remember that it is a mix between temporary life insurance and pure endowment, right?
Imagine that you want to take out this insurance. The first step is to find a broker or insurance company that offers these services, right? Afterwards, she will make an evaluation to define the contractual rules, mainly to determine amounts and deadlines.
The next step is to combine monthly premium payments over 10 years. Within that period, if you die, your beneficiaries will receive the life insurance compensation. If this does not happen, within the stipulated period you will redeem the amounts paid.
It is worth emphasizing that the period for payment of premiums does not necessarily have to be the same as for the payment of the benefit. So, you can pay for 10 years and have insurance for 20 years, for example. It is also necessary to consider taking out additional coverage, in addition to death and permanent disability. These services vary according to the contracted insurer, but there are some common ones, such as:
- funeral assistance;
- loss of personal autonomy;
- hospitalization costs;
- serious illness and accidental disability.
However, to have access to additional coverage, it is necessary to supplement the premium amount. It is essential to verify what will be needed in each case and to carry out a simulation to analyze the feasibility.
Main features of mixed endowment life insurance
The characteristics of a mixed endowment life insurance depend on several factors, mainly on the stipulated contract and the insurer. But there are some points that policyholders need to know before signing a contract. The first is the minimum and maximum ages for hiring. Although there are variations between brokers, generally they are between 14 years of age to hire and can reach 70 years.
In addition, a mandatory end of term must also be established, that is, a deadline for insurance. Generally, this period lasts until the insured reaches 100 years of age, at which time he will receive compensation.
Another important issue concerns how the indemnity will be paid to the insured. Here, there are several types of contractual stipulations. There may be a payment of a certain amount for a certain period of time, for example.
There are also options with a lifetime monthly income and monthly income with a guaranteed minimum term. However, the insured may enter into a contract that guarantees a single payment, which will be the redemption of premiums paid, plus interest and payment of fees.
An important feature of mixed endowment insurance is the possibility of redeeming or even transferring it to another insurer. However, a grace period must be met, which will be stipulated in each contract. Therefore, the insured may request a total or partial payment of the indemnity. However, it is essential to consider the payment of Income Tax on this rescue, in addition to the insurer’s loading fee.
Advantages of mixed endowment insurance
That the mixed endowment insurance has some features and differentials that can bring benefits to the insured and their dependents, is already a fact. But what are the advantages? The first is the double possibility of rescue, both for survival and for the death of the contracting party.
Unlike pure endowment insurance, there is always the possibility of using and redeeming the amounts paid as a premium. This can bring more security and peace of mind to policyholders, especially those who use this option as a financial reserve.
Another advantage is that mixed endowment insurance is considered a relatively safe way to save your money. As profitability will be known in advance, there is predictability and protection once morest losses.
The tax issue of life insurance is also very attractive. In the event of the contractor’s death, the compensation paid to dependents is exempt from income tax. Furthermore, according to the Civil Code, it is also not part of the inheritance. Therefore, the Causa Mortis and Donation Transfer Tax (ITCMD) will not be charged, nor will a proper process be required. It is the insurer itself that makes the payment to the beneficiaries within a period of up to 30 days.
Were you able to understand how mixed endowment life insurance works? This option can serve as a financial reserve and for succession planning.
Don’t waste time and improve your knowledge, subscribe to our YouTube channel to explore the best investment opportunities on the market.
Got any questions? If you would like to know more investment alternatives, count on our advice! Contact us, we have a team prepared to help you!
