Age, by excess and by default, and serious illnesses are two of the most common causes of exclusion
Are you considering taking out life insurance? In that case, you should know that companies demand certain requirements when formalizing the policy. Some guarantees that, unfortunately, not everyone can meet. Because, who are the people who usually discard the entities that concern us? And, most importantly: what reasons lead them to do so?
What is the insurance of life?
In the first place and before entering into greater vicissitudes, it should be clear what life insurance is. It is a personal policy that covers the risk of death of the insured. Its objective is to guarantee that the client’s beneficiaries receive financial compensation in said situation.
Several parties are involved in this insurance. On the one hand, to the insured – who is the one who acquires the coverage – and, on the other, to the policyholder – who is the one who subscribes and pays for it. Finally, there is the beneficiary, who is the one who receives the compensation when the circumstances contemplated in the contract are met for it to become effective.
Types of life insurance
There are different types of life policies with specific characteristics, depending on the client who is going to sign them. The most prominent are:
- Temporary life insurance: the client can contract the policy for a specific period, which can range from a few days to several years or until the client reaches a certain age. They are aimed at covering specific needs, such as going on a trip or protecting the development of specific risk activities.
- Whole life insurance: in this modality, the insurer compensates the beneficiaries without taking into account the moment of death. In addition, it covers for life and provides the family or beneficiaries with amounts that compensate for the loss of income.
Companies do not assume the risk of insuring people with advanced age, in most cases, the limit is 65 years
- Savings insurance for survival or retirement: the purpose is to provide the client with a specific monetary amount at the end of the period agreed in the contract. Its basis is an investment in the medium or long term and it is conceived as a kind of supplementation during retirement or before possible disbursements that are made in the future.
- Risk Life Insurance is a policy that protects the beneficiaries chosen by the insured if he dies. The premium can be annual, and the way of calculating it is based on three main factors: age of the insured, medical history, and the capital that is covered. Thus, if the insured dies, the beneficiary will obtain the money marked in the contract. The policy is void if it comes to an end before death.
- Mixed insurance: This is one of the lesser-known types of life insurance. It is a kind of hybrid insurance that has, within the same contract, risk insurance, and savings insurance. In this way, death is covered but, at the same time, the client will be able to benefit from the agreed benefits if he survives the age stipulated in the contract.
- Annuity insurance: the insured person will have guaranteed formal and life annuity when they pay a single amount or a premium for a certain period. For life, it is a specific amount and is disbursed from the moment the policy comes to an end and while the insured is alive.
People excluded by life insurance
As we have already mentioned, although life insurance is a product whose subscription is voluntary, certain requirements must be met to contract it. Some of them are imposed by law, while others are established by each insurance company.
- Those older than 65 years. When hiring life insurance for people over 65, you have to be careful. Most companies don’t usually take the risk of insuring people this age, but some do. If it is a person who already had life insurance subscribed in case of death, the entity would extend the coverage up to 70 or 80 years.
- On the other hand, the Insurance Contract Law prohibits the contracting of life insurance for minors. Although life insurance cannot be contracted until we reach the age of majority, some entities ensure young people from the age of 14. However, the policyholder must be a third-party and the consent of the parents must always be obtained. We must point out that to price the risk when insuring the life of a specific client and establish the price of the premium, the actuarial age is usually used, which is calculated taking into account the birthday closest to the date of contracting the insurance.
- People with serious illnesses. Those suffering from chronic or serious ailments are also excluded. Most insurers request reports on our state of health. For example, the most common risk diseases such as cancer. However, with the new European regulations, this fact is changing. Things change if the pathology develops with the policy already signed.
- Disabled people. The Insurance Contract Law prohibits the contracting of insurance for the disabled, who are those who have been legally deprived of their powers to act for themselves.
- Those who have risky professions. If you work in a sector that is considered risky, you will not be able to easily take out insurance. General policies do not usually cover certain professionals such as pilots, acrobats, divers, etc. But most insurance companies offer other options depending on the specific characteristics of your job.
- Non-residents in Spain. To take out life insurance, it is required to have fixed tax residence in Spain. It does not matter if you have Spanish nationality, the essential requirement for these people is that they live in our country for a minimum period of six months.
Despite all these exclusions, most are considered special cases, and, normally, there is a tendency to offer alternatives to people who find themselves in any of these situations.