How Life Insurance Works

In this article, we are going to tell you how life insurance works so that you can understand it in an easy and intuitive way.

The operation of life insurance is simple, a fee is paid per year to the insurer and the capital that has been insured is paid to the beneficiaries of the policy in the event of the death of the insured.

Life insurance is a product marketed by life insurance companies that are used to protect the family in the event of the death of the insured.

Life insurance as it works

If the death of a person occurs, the income that they stop entering from month to month in the family unit is diminished in an important way. This imbalance is what is intended to be solved through life insurance. With life insurance the insured guarantees his family an economic cushion that allows them to face the new situation.

Life insurance, therefore, has a simple mechanism, if the insured dies the insurance company pays compensation to the person or persons who are as beneficiaries in the policy. Therefore this is how life insurance works.

The insured pays a price for the policy year after year with the assurance that in the event of the loss the company will pay the amount stipulated. How much does life insurance cost?

The use of life insurance and how it works, is very common, (only in Spain there are more than 14 million insured), since the utility of it is very powerful because it allows you to take care of yours even when You are among them.

Another use that is usually given to life insurance is as an element to protect the loved ones from the debts that one contracts, for this purpose life insurance for mortgages is used.

We have talked about life insurance in its basic coverage that is the death for any cause, but you can also hire additional coverages such as permanent and absolute disability not only protects the family but also the insured.

In life insurance, there are different figures that give meaning to the contract and we must know to know how life insurance works



– The main figure is the insured, which is the person on whom the insurance falls, the policy covers the risks of the insured.


– The Policyholder, is the responsible and owner of the policy, is responsible for paying the same. It is the one that has the rights and obligations over it.


– It is the insurer or mutual entity, which undertakes to pay the capital in the event of the loss, whose coverage is included in the policy.


– It is the person or persons who will receive the benefits contracted in the policy in case of the occurrence of the loss

Insurance Mediator

It is the company or individual that distributes the insurance and is in charge of the negotiations between the company and the policyholder.

There are independent mediators insurance brokers and mediators that are not (they work only with one company on which they depend).

Now that you know how life insurance works, we invite you to also know their prices. For this, we provide you with this tool with which you will know in real time the prices of the best life insurance companies.


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