What is life insurance? How does it work and what does the cost of the policy depend on?

A life insurance policy guarantees the insurer pays a sum of money to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime. The life insurance application must accurately disclose the insured’s past and current health conditions and high-risk activities to enforce the contract.

Life insurance provides financial protection for your family in the event of your passing. Your beneficiaries will receive money to use as they see fit, ensuring security in a difficult time. For a life insurance policy to remain in force, the policyholder must pay a single premium upfront or pay regular premiums over time.

Cumulative life insurance is a type of long-term life insurance , according to which the sum insured is paid to the insured when he survives to the specified period or in the event of the death of the insured to his heirs.

Term Life Insurance can be a very convenient and cheap way to protect your family and save money on insurance premiums. Term life insurance policies expire after a certain number of years. Permanent life insurance policies remain active until the insured dies, stops paying premiums, or surrenders the policy.

“Life Insurance in Ukraine” is a specialized online project about endowment and risk life insurance, which is useful for both policyholders and financial professionals, is part of Beinsure Media (digital media about insurance and insurance technology) and is part of Finance Media Holding.

Our insurance B2C project is designed exclusively for consumers of insurance services, whose task is to help insured individuals and risk managers of large enterprises choose a reliable insurance company. We are not a representative of an insurance company and do not lobby anyone’s interests.

How does life insurance work?

The policyholder pays the insurance premium calculated by the actuary of the insurance company according to the option specified in the life insurance contract. And the insurer, in turn, under the contract (10 or 20 years) undertakes to provide protection to the insured using the money contributed, to earn investment income for the insured, the average value of which in pre-crisis times was 14-17% in hryvnia (including 4% of guaranteed ).

Insurance companies, according to the Law of Ukraine “On Insurance”, guarantee an investment income of up to 4%, and the remaining bonuses are accrued to the insured based on the results of the investment activities of the insurance company.

A classic life insurance contract is concluded in order to provide the specified beneficiary with compensation for the loss in the event of the death of the insured. Under the classic life insurance contract, we are talking about death insurance . By concluding this agreement, the insurance period can be chosen in such a way that it covers, for example, the loan repayment time or the time when your children are still growing and not working yet.

What determines the cost of life insurance in Ukraine?

Tariffs for accumulative life insurance are 4-10% of the sum insured and depend on age (the younger the insured, the lower the tariff), gender (for women, the tariff is lower than for men) and the health of the insured. When determining the cost of life insurance, mortality tables are used, on the basis of which the expected amount of insurance payment is calculated.

The most precious and most important thing in life is a family for which you work hard and strive for success, since your relatives and friends need your protection and care first of all. Therefore, one of the main tasks is to ensure a worthy and stable future for ourselves and our dearest people.

Therefore, it is worth taking care of this in advance and creating financial protection, one of the options of which is endowment or risk life insurance.

If you have taken a job that is more dangerous than your previous one, then it will be more beneficial for you to have such a life insurance policy for the duration of your job . After you quit a dangerous job, you can safely cancel your temporary insurance without any penalties.
There are many benefits to term insurance. First of all, this type of insurance is very simple and understandable, which makes it accessible to almost everyone.

A life insurance contract, as a rule, is concluded for a period of at least one year, therefore, life insurance can combine accumulative and risky functions (this type of insurance is mixed death and survival insurance, it can also include accident insurance).

What risks are covered by life insurance?

The main risk against which life insurance protects is the risk of the death of the insured person and the financial losses of the beneficiaries associated with it. Typically, the risk of death includes the risks of death from accident, illness or wrongful acts of third parties. The risk of suicide can be included in the contract, but only in exceptional cases, such as credit insurance. The inclusion of this risk must be accompanied by additional clauses. Additionally, risks of permanent disability, survival, etc. may be included in the contract.

What is an insured event under the accumulative life insurance program?

– surviving until the end of the insurance period;- death of the insured (may be “for any reason”);– death of the insured as a result of an accident, traffic accident (the sum insured is doubled);- loss of health and disability from an accident (disability).