Protecting My Family: Life Insurance & Accident Insurance

I have often been asked — have I personally insured myself to protect my family from financial difficulties in case I face a serious health misfortune?

The answer is yes, I have insured myself, and in a way that’s quite different from most people. Almost everyone who has asked me about it, after hearing my perspective, has tried to copy it.

My situation: office job, wife, 2 children, average income level, mortgage. I am the main breadwinner of the family. A standard situation. If I could no longer earn an income, or if I were gone entirely, it would critically affect my family’s standard of living. I have worked on resolving this issue carefully and with the utmost attention.

There are several types of insurance available on the market that can help in such unfortunate situations. However, considering the marketing budgets of insurance companies, greedy sales agents, and the complexity of insurance terms, only a few people truly understand them. I would translate the main types of insurance as follows:

• Life insurance — Pays compensation to heirs in the event of the insured person’s death. There are exceptions such as participating in war activities as a paid soldier, suicide, etc. However, overall, they are relatively few. The policy is not cheap. It also pays out if death occurs due to health issues. It is often confused with accident insurance; I have also heard others call it health insurance. The policy can be supplemented with various additional risks — accidents, critical illness coverage, etc.

• Accident insurance — Pays compensation if an injury is sustained due to an accident. Usually, these policies cover 3 parts — death, disability, and injuries. Depending on what happened, compensation is paid — in the case of death, the full insured amount; for disability or injuries, a portion of the sum depending on the severity. Often incorrectly referred to as life insurance, but it does not cover death or disability caused by illness. The policy is much cheaper. It can also include various additional risks, but these mostly cause confusion, and the terms are unreadable for the impatient.

• Health insurance — Reimburses medical expenses up to a certain amount, if they are included in the terms and do not conflict with exclusions. I also often hear it incorrectly called life insurance, but that is completely wrong.

• Various other types — Unemployment insurance, dangerous illness insurance, critical illness insurance, disfigurement insurance, social care insurance, medical expense insurance, tick-borne disease insurance, crisis illness insurance, family welfare insurance, loan repayment insurance, social care insurance. And many more interesting names. To some extent, these may overlap with one of the above-mentioned types, but due to complicated terms and flashy names, I see them more as expensive marketing traps that people often fall for and pay their money for. In my opinion, they are unnecessary, but since I don’t know every situation and need, maybe for someone they are worthwhile products.

  
  

What do I need?

If the “X hour” comes, and I am no longer here or I can no longer function in a way that allows me to support my family, it would be a huge tragedy. My family’s prospects would change drastically due to financial reasons. Mortgage payments would still have to be made, and our monthly expenses for all our needs would remain at their current level. Even funerals are not cheap. In case of disability, although the state provides some benefits, they would most likely be far from covering the actual necessary expenses - even if all work taxes have been paid in full.

I cannot eliminate this risk entirely, but with insurance I can make such unexpected changes easier to handle.

I’m around 40 years old, so for now I consider death or disability due to health problems less likely than from accidents — traffic accidents, assaults, or other random mishaps.

Life Insurance

Accordingly, I purchased life insurance with a sum insured of €100,000. I currently pay €300 per year. To conclude the policy, I had to undergo a health check paid for by the insurer - a free check-up.

Accident Insurance

Additionally, I purchased accident insurance, but since I know what’s in the terms and I am not very interested in receiving a few tens or hundreds of euros for minor injuries, I chose to include only 2 risks — death and disability — with a sum insured of €250,000. Accident insurance is about three times cheaper when you compare the insured amount to the payment, costing €200 per year. In total, €500 per year.

For example, if I die in a car accident, my wife would receive €100,000 from the life insurance policy and €250,000 from the accident policy. If I get a fatal illness or die from a heart attack, only the life insurance policy would apply, as that is not considered an accident in the insurer’s understanding.

Such a sum would help offset the drop in total family income for some time and allow us to adapt to the new situation more slowly than if there were no such policies.