Whole life death insurance: how does it work?

If life insurance is a savings product, death insurance is a provident insurance contract for which the subscriber pays premiums to an insurer. The latter will have to pay in exchange, at the time of the death of the insured, a capital to the designated beneficiaries. Death insurance can be of two types: term death insurance which is only valid for a fixed period, and whole life death insurance which extends for the life of the subscriber.

How does whole life death insurance work?

It is not because the whole life death insurance extends until the end of the existence of the subscriber that the payment of his capital is guaranteed in all circumstances. Indeed, a whole life death insurance contract generally provides for exclusions for certain causes of death of the insured (suicide, practice of risky sports, illnesses not declared in the medical questionnaire requested before subscription, etc.). If the subscriber dies from an exclusion provided for in the contract, the beneficiary or beneficiaries he had designated at the time of signing will not receive the capital constituted.

To build this pension capital, the subscriber pays one or more premiums to the contract. The premium can indeed be unique at the time of subscription, or the insurer can on the contrary request the payment of several premiums: over a defined period or until the death of the insured. In the latter cases, the rate of payments is also included in the whole life death insurance contract. This type of death insurance allows the subscriber to stop paying premiums without his contract ending. But in return, the value of the guaranteed capital is reduced.

When to take out whole life death insurance?

Whole life death insurance is a provident policy often recommended to anticipate your succession. As Taxation of life insurance, that of whole life death insurance provides that the capital paid to the beneficiaries is not taken into account in the estate assets (no inheritance tax to be paid). In addition, the amount obtained by the recipients can be used as an envelope provided by the insured to pay for various things upon his death, such as funeral expenses, the education of his children or grandchildren, the reimbursement of credit in progress…

Another advantage of whole life death insurance is that it can include certain guarantees traditionally present in conventional provident insurance contracts. It is thus possible to see, for example, the capital of the beneficiaries being increased in the event of death by accident, or for the insured to receive an annuity if the latter faces a total and irreversible loss of autonomy (PTIA), or to total or partial disability.

(By the editorial staff of the hREF agency)

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