Term Life Insurance
Target group/Insuring party
The Term Life insurance is a relatively cheap option for practical people to cover the risks in their lives and financially provide for their families in case some tragic events occur in their lives. It is of interest to companies who wish to provide life insurance cover for some of their employees.
Insured person
The Insured person under this policy may be the person concluding the insurance agreement, if he is a natural person, as well as his relatives, or company employees if the insurance agreement is concluded by a legal entity. The Insured shall be a natural person aged between 18 and 64 as of the date of the beginning of the insurance cover, and they should not be over 65 upon the expiry of the insurance policy.
Beneficiaries
The Client may specify the Beneficiaries for each of the risks covered by the insurance. Usually they are the spouse, offspring or other relatives of the Insured.
Risks covered
- Death of the Insured during the term of the insurance cover
Additional risks
Unlike Endowment Insurance, this type of policies do not provide for additional risks.
Term of the insurance
The agreement is concluded for a term of at least 5 years and as of the end of the term the Insured may not be over 65 years of age. If the agreement is concluded in favour of a bank as collateral on a loan, shorter terms are permissible.
Insurance premium
The premium is single or annual, no payment in installments is allowed. In the event of default on any of the premiums the Insurer may terminate the agreement if less than 2 years have passed since it became effective, or transform in into a Paid Agreement if more than two years have passed.
Insurance payment
In the event of an insured risk the Beneficiaries receive the Sum insured as of the date of the event – the sum as per the List or the Insurance payment of the Paid Insurance Agreement if it has been transformed.
Other terms
- A Paid Agreement is an agreement under which no new premiums are due. On the grounds of the premiums received by a certain point, and if at least two years have passed since the agreement became effective, the Insuring Party may request the transformation of the agreement into a Paid Agreement, upon which the Sum Insured shall be reduced. The Insurer may transform the agreement in the event of default on a due premium after he notifies the Client about his decision. Payments on a Paid Agreement may be renewed within one year after it has been transformed, provided the due premiums and the interests are paid;
- Surrender value – this is the amount the Client may receive upon the termination of the agreement. Right to surrender occurs two years after the agreement enters into force.
- There are no bonuses and indexation for this type of agreements
Taxation
- personal contributions for Life Insurance are deducted from the taxable income to the total amount of up to 10% of the taxable income;
- in the event of death the insurance payment is exempt from taxes