Life Insurance VS. Retirement Insurance: Differences & Similarities
Future events are often out of our control, but actions can be taken to prepare for them. Life insurance or retirement insurance are forecasting tools that can support you tomorrow.
Now, can these instruments provide you with the same coverage? The answer is no. Both offer protection, but they have aspects that differentiate them and that you must know very well to choose the most appropriate one.
In this article, we will tell you what each of these investment products offers and how to choose the most convenient one for you.
What is life insurance?
It is a pension product that guarantees economic support for the insured person and their beneficiaries. That is, if the insured dies, those who were under her guardianship receive financial compensation.
Depending on the type of coverage contracted, life insurance also guarantees economic support in situations other than death. Among them, we can mention disability due to work accidents and suffering from serious illnesses.
What is retirement insurance?
It is an instrument that guarantees the insured a certain amount of financial resources upon reaching retirement age (65 years). This represents one of the alternatives offered by the market to complement the official pension system.
How does it work? The beneficiary makes contributions to an account in his name. With the passing of the years, interest is added to these savings that constitute the capital to support the needs in old age.
Both life insurance and retirement insurance provide protection against scenarios or events that are expected in the long term. However, there are some aspects that differentiate them and that we list below.
- Life insurance is collected by your beneficiaries in the event of your death. The retirement insurance you enjoy when retirement arrives.
- Retirement insurance generates a return over a period. Life insurance does not, the insured sum is immovable.
- Life insurance money can be collected by multiple beneficiaries. The retirement insurance resources are allocated to a single person.
- Retirement insurance is the product least demanded by Mexicans. While life insurance is among the best-selling policies each year in the country.
- The payment method for life insurance premiums must be made monthly or quarterly. In the case of retirement insurance, contributions are made monthly or biweekly.
Importance of having insurance
Eventualities and risks are part of life. What we least want is for our well-being or that of our loved ones to be violated by any unexpected event.
This reality leads us to consider the importance of considering the advantages that hiring insurance can offer us.
Having financial support for the future and the opportunity to protect assets with a long-term investment are the main benefits provided by insurance.
How do you know which one suits you best?
Both life and retirement insurance have a common element. Both are instruments designed for long-term savings and investment. However, they are intended to provide different coverage.
The correct choice between these two types of insurance will depend on your requirements. Therefore, you should weigh the advantages offered by each one and decide which coverage best suits your needs and those of your loved ones.
If you are looking for a product that guarantees sustenance for your family if they lack it, life insurance is the most appropriate option for you.
On the other hand, if what you need is a tool to face a more comfortable old age, then retirement insurance will be the best option.
Read Also: Massachusetts Health Insurance -Types & Best Plans
Conclusion
Have you thought about what would become of your loved ones if something were to happen to you? Are you willing to leave them without any kind of protection in the face of an unfortunate event? Have you analyzed how you will face your needs in old age?
Do not allow uncertainty or lack of foresight to mark your destiny and that of your loved ones. You and your family deserve to have support to adequately face any situation in the future. For these cases, life or retirement insurance is the best option.
