Insurance emerged and developed in line with the evolution of various forms of social organization. It operates through contracts , called policies, in which the insurer undertakes to cover damages with the “insured capital”.
Originally, insurance had no technical or legal basis, functioning as a simple risk distribution mechanism. This is the case of primitive insurance against bad harvests, practiced in Antiquity and the Middle Ages.
Today, insurance works in a complex way and the insured capital serves as a reference value. In this post, we will explain what the insured capital of life insurance is , showing its importance and how to calculate its value. Good reading!
What is the insured capital of life insurance?
The insured capital of life insurance is the maximum amount that can be received from the insurer. There are some key points to understand the concept:
- the insured capital is the reference for calculating compensation, symbolized by the full value or part of it;
- It is usually calculated by multiplying the annual income bracket, as it serves to maintain the beneficiaries’ standard of living in the event of the insured’s absence;
- its rule is defined in the policy, as well as coverage, validity, conditions and some other points;
- rules vary depending on the insurer, plan and coverage;
- Although the insured capital is the reference in calculating compensation, it is not synonymous with it.
How to calculate its value?
The insured capital is, on average, three to ten times the annual income. This is because its existence takes into account the need to maintain the beneficiaries’ standard of living throughout the year.
Here, it is worth looking at the policy and keeping in mind that the insured is not always the beneficiary. After all, one of the events that life insurance covers is the death of the beneficiary. However, this influences the value of the monthly fee (or annual fee, or single amount) that will be paid to the insurance company.
If you have, for example, high debts or financing, the amounts paid to the insurance company also tend to be high. But other items also come into the account, such as risks and coverage.
Does it make sense to take out life insurance?
You will most likely spend around R$5,000 per year to keep your used vehicle protected by car insurance. But you wouldn’t pay 10% of that to protect your family if something unexpected happens.
This makes life insurance potentially very beneficial. After all, the insurance company pays compensation to whoever you choose immediately after a possible death, reducing the impact on the standard of living of people who are financially dependent on it.
Some even pay the funeral costs. Money is no longer a product that you won’t use because, at some point, we are all going to die. Payment is exempt from income tax and occurs regardless of time-consuming inventories or asset sharing.
What is the use of this modality?
Life insurance is also useful because it is not just for death. Policies also focus on the lives of those who are still alive, with coverage in cases of illnesses that make it impossible for them to work.
Self-employed professionals who do not have any INSS guarantee and who suffer from a serious illness can benefit from the insurance. This applies even to pensioners, as the amount may take time to be paid or be insufficient to finance the family’s lifestyle.
In addition to helping cover expenses, compensation can also guarantee payment for medical treatment. In the most comprehensive options, it is possible to count on assistance with a locksmith, mechanic, pet care, tire change, and so on.
What are the types of life insurance?
Life insurance is divided into several types . In the traditional way, indemnities are paid according to the events that appear in the policy. It’s common operation. But there is also the redeemable option, which also has the possibility of redeeming part of the amount invested.
If there is no claim, it is possible to redeem after a waiting period. In simplified life insurance, there is a similar operation to traditional life insurance. The difference is in hiring, which is done directly online. Here, the amount of coverage tends to be smaller, as the approach is simple.
Temporary life insurance provides compensation for an already established period. The strategy is useful for the short and medium term, maintaining the family’s standard in the event of the provider’s absence. A variation, the temporary decrease, reduces the compensation until the end of the contract.
What is the coverage like?
Life insurance coverage varies depending on the plan. But the most common are:
- temporary or permanent incapacity, when health problems keep the insured person away from work;
- natural death, caused by wear and tear caused by age or fatal diseases;
- accidental death, when death does not occur for the above reasons;
- medical or dental expenses, when the treatment that occurs as a result of the claim is covered;
- funeral allowance, an amount paid to help with burial arrangements;
- funeral assistance, services performed for burial and covered by the insurance company.
Life insurance is personalized and it is worth analyzing what you really want to protect before composing the best coverage .
The insured capital represents the highest possible value provided by the insurer. It is the reference value for calculating compensation, with rules that vary according to the plans and coverage. The ideal is to consider all the elements involved in the insurance transaction. Consider the risk, the insured item, the interest, the sum, the amount paid to the insurer, the loss and the compensation. The idea of insurance is to assume a relatively small and known loss in the form of the premium paid to the insurer, in exchange for the guarantee of compensation in the event of a large loss.