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Insurance as a savings instrument

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When we talk about life insurance, most of us think of a pension product that we hire especially so that our family can cover all their future needs. But Eye med life insurance is much more, its flexibility makes it, for example, an ideal product to cover our retirement but also, more in the short term, an excellent savings vehicle.

insurance guarantees

Because what characteristics do these products have? As their name suggests, they are above all insurance and as such there are major differences with deposits, from operation to guarantees, since they are not under the umbrella of the Deposit Guarantee Fund.

Even so, security and insurance controls are more than important: insurance companies are supervised by the General Directorate of Insurance and Pension Plans, its controls are very strict, and in the unlikely event of bankruptcy of the company it would be supervised by the Insurance Compensation Consortium that would be in charge of the liquidation.

Difference between insurance and deposit

But beyond the guarantees, the operation also differs from the deposits, although it ensures capital and a return for a fixed term, the big difference is that this return is accumulated and is not paid until maturity, which means that it does not have withholdings or payments to the treasury until maturity. This point is important since the payment of taxes is deferred, but it is concentrated at a certain moment in time since its result is taxed in the same way as income from movable capital.

How do contributions work?

Another important characteristic is that in this type of product, payment of minimum amounts is usually established throughout the duration of the product, an initial income is not made in which interest is paid, but the final capital is the result of these contributions. and the interest generated. This generates a periodic, monthly, quarterly, semi-annual, or annual payment obligation, a point that must be analyzed very carefully. It is especially convenient that there is the possibility of temporarily paralyzing contributions in the event of any unforeseen event.

Other factors to consider

Likewise, liquidity must be analyzed very well. We must carefully analyze the conditions in which to recover our money before expiration, in general, it is that it allows the partial withdrawal of the funds.

Finally, we must not forget that part of our contributions is destined for an insurance premium that covers cases such as death with additional capital that contributed with our periodic savings. 

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