Have you decided to take out life insurance, which is not exactly a cheap affair and you are interested in how its benefits are calculated? Or have you had an accident and will not be able to contribute to your family budget for a long time? Life insurance is used to secure the financial situation of your loved ones in case of unforeseen events.
The loss of income of one of the breadwinners is unpleasant and often throws the family into a financial crisis. The solution to avoid such a situation is to take out life insurance in case of:
- Limitation of work abilities
- Long-term illnesses
- Hospitalization
- Permanent consequences
- Deaths (including death as a result of an accident).
Life insurance can be taken out by anyone from birth to the age of 80, and it is important to have it well set up.
You can take out life insurance in two basic types:
- Investment life insurance(reserve insurance), where part of the premium paid by you is invested in various products on the financial markets.
- Risk life insurance, which includes insurance against serious illness, accident, disability, hospitalization or long-term incapacity for work.
Arrange insurance limits well
This means the amount that the insurance company will pay out in the event of an event for which you have insured. Their amount depends on your wishes, age and the amount you can pay.
Before you go to the insurance company to sign a contract , try to evaluate the level of risk, standard of living and opportunities for you and your family. Make an inventory of your income and expenses, consider the available financial reserves. Take into account your financial obligations (mortgage, leasing, loans, etc.). Calculate how long the family would make up for the loss of income from other sources.
In the event of death, it is a good idea to set an amount that ranges from two to five times your annual income.
Example : If you set the death limit to 1,500,000, then the intended person will receive this amount in the event of your death.
Our tip: Taking a life insurance policy is financially expensive. Compare the offers of individual insurance companies online.
How is life insurance calculated?
Each insurance company has its own valuation tables. There is a list of accidents and illnesses that life insurance can cover. The duration of treatment is then determined for each injury or illness. Accordingly, the approximate amount of the insurance company’s performance can be determined . But beware – the insurance company may reduce the payment.
Daily compensation
Have you also taken out additional insurance in the event of incapacity for work and agreed on daily compensation? Then multiply the number of days of incapacity for work by the agreed amount. Again, this is an approximate calculation.
Permanent consequences
Are you bothered by the permanent consequences of the accident? Even then, you can most likely look forward to some insurance coverage. However, the lasting consequences are divided into two groups, and the time when the fulfillment will take place depends on it.
- Permanent consequences demonstrable immediately. This includes injuries that occur immediately. For example, if you lose a leg or an arm as a result of an accident.
- Permanent consequences that you do not prove immediately– Such consequences that can improve for some time before they stabilize. For example, limited joint mobility. You won’t even move after a joint injury, but as a result of rehabilitation, your mobility will improve, even if you don’t return to the state before the injury.
The amount of performance again depends on the limit to which you have insured the permanent consequences and performance according to the valuation tables. There you will find the diagnosis and the percentage of fulfillment. You then multiply this by the amount for which you insured the permanent consequences. Then comes the game of progression. Its amount depends on the insurance company. Take a look at the table again and multiply the amount by progression.
Example : You have insured permanent consequences for CZK 1,500,000. In the valuation table, you found that the percentage fulfillment is 50%. 50% of 1,500,000 is 750,000. Progression for injuries with a percentage of 50% is set at three times. Therefore, you get the final amount of the approximate performance by calculating 750,000 × 3.
