Meginmál

In­sur­ance in its simplest form is meant to pro­tect you from un­ex­pec­ted fin­an­cial losses. In­sur­ance can be man­dat­ory, which means that the owner of a prop­erty or vehicle is ob­liged to in­sure the as­set or in­sure it against any dam­age it may cause. Ex­amples of man­dat­ory in­sur­ance are prop­erty fire in­sur­ance and vehicle in­sur­ance. On the other hand, there are nu­mer­ous op­tional in­sur­ances avail­able de­signed to pro­tect you and your close ones against a vari­ety of dam­ages, e.g. home and fam­ily in­sur­ance, health in­sur­ance and life in­sur­ance.

The terms of an in­sur­ance policy stip­u­late, among other things, what the in­sur­ance cov­ers and what it does not cov­er. The terms of an in­sur­ance policy can be com­plic­ated, so it is im­port­ant to fa­mil­i­ar­ise your­self with them be­fore buy­ing the in­sur­ance. It is a good idea to get the per­son who is selling the in­sur­ance to care­fully ex­plain the terms to you and, if you do not think the terms are clear enough, to ask for more de­tailed in­form­a­tion.

It is a good rule to re­view all in­sur­ances reg­u­larly, e.g. once a year.  You need to check whether you are prop­erly in­sured or whether you are doubly-in­sured for any dam­age in which case the in­sur­ance needs to be re­viewed, es­pe­cially if the cir­cum­stances change, e.g. fam­ily size, hous­ing or in­come.

Li­ab­il­ity in­sur­ance

  • If you are liable for damage suffered by an injured party (third party), your liability insurance protects the injured party's right to receive compensation.
  • Liability insurance also covers costs you may incur if a claim is made against you.
  • The number of liability insurances is increasing because, among other things, it is increasingly common for professional indemnity insurance to be a condition for the issuance of a work permit for various self-employed professionals.
  • Construction managers, lawyers and real estate agents are examples of professions where professional liability insurance is mandatory.
  • However, professional indemnity insurance for architects and engineering and technical experts, for example, is optional.
  • General liability insurance covers other types of liability than vehicles, aircraft, ships and boats.
  • Carefully study the information document  on the liability insurance.
  • Carefully review the terms of the liability insurance.
  • Find out how broad the coverage of the insurance is.
  • Check specifically what the insurance does not cover.
  • Do not hesitate to request detailed information from your insurance company.

Non-life in­sur­ance

  • Non-life insurance means insurance, i.e. protection or compensation, against damage or destruction of property, rights or other interests, liability for damages and other insurance that is not personal insurance. 
  • Non-life insurance includes accident and health insurance, vehicle and cargo insurance, marine and cargo insurance, flight and cargo insurance and property insurance.
  • All parties selling non-life insurance are obliged to provide information about the insurance they are offering for sale in a special standard information document on non-life insurance.

Per­sonal in­sur­ance

  • Personal insurance is tied to the life and health of a specific person, i.e. life, accident and health insurance.
  • All parties selling personal insurance are obliged to provide information about the insurance they are offering for sale in a special standard information document on personal insurance.

Life in­sur­ance

  • Life insurance provides some financial protection for the close ones of those who have taken out such an insurance. For example, if there are people who depend on you and rely on your income for support.
  • If you have a life insurance policy and die due to an accident or illness, your family or a person you have chosen as the beneficiary of the policy will receive benefits.
  • Spouses receive death benefits in cases where individuals are married.
  • It is possible to specify a beneficiary other than the spouse.
  • In cases where individuals are not married, it is possible to designate a cohabiting partner as the beneficiary of the life insurance.
  • Life insurance benefits are paid to legal heirs or to the person specified in the insurance policy, the insured person decides on who is the beneficiary of the life insurance.
  • Life insurance benefits are paid out in a lump sum according to the agreed amount of the insurance. No tax is paid on life insurance benefits and the compensation amount is indexed over the term of the contract.
  • It is a good idea to base the amount of the insurance on income, debts and the status and size of the family.
  • It is important to review the compensation sum of your life insurance if  circumstances change, e.g. if the family grows or shrinks, your salary drops or your debts increase.
  • Generally speaking, persons aged between 18-64 can apply for life insurance, although the upper age limit varies between insurance companies.
  • In general, life insurance is valid until the age of 75, the validity period of the insurance is specified in the insurance policy.
  • Ensure that the life insurance contract is in writing.

In­sur­ance-­based in­vest­ment products

  • Insurance-based investment products are products that contain both insurance components and investments designed to accumulate savings.
  • Assessing the value and risk of insurance-based investment products can be difficult, since their value depends on the value of the underlying assets and market conditions. The value of these investment products can therefore fluctuate widely.
  • Savings and life insurance savings are examples of insurance-based investment products.
  • All entities that provide advice on or sell insurance-based investment products to retail investors are required to make a key information document about the product.
  • A key information document is intended to provide retail investors with sufficient detailed information to enable them to make informed investment decisions.
  • The key information document on insurance-based investment product should be made available before a contract is signed.
  • The key information document should enable you to understand and compare the key features and risks of the policy with other insurance-based investment products.
  • Carefully read the terms of  both the life insurance and investment sections of the policy before signing it.
  • Before entering into a contract, carefully examine the different aggregation options, risk levels, potential benefits, costs and fees, notice periods and the recommended minimum period for you to own the product.
  • Carefully research the costs and fees paid for unit-linked insurance.
  • Ensure that the contract is in writing.

Health in­sur­ance

  • Health insurance pays you compensation if you are diagnosed with a disease that is covered by the insurance and is listed in the information document and its terms and conditions.
  • Carefully study the terms of the insurance before signing the agreement, i.a. to make sure the insurance is suitable. In most cases, the insurance is only valid for the diseases specified in its terms.
  • The policyholder determines the amount of the health insurance when taking it out. Health insurance benefits are generally paid out in one lump sum and no tax is paid on them.
  • It is good to base the amount of the health insurance on income, debts, family income and size.

Home and fam­ily in­sur­ance

  • Home and family insurance is intended to protect individuals and families from damage to contents or accidents to people.
  • A wide variety of home and family insurance policies are available that include different types of insurance coverage. It is important to choose an insurance policy that suits everyone.
  • Home and family insurance commonly includes contents insurance, full contents insurance, liability insurance, holiday accident insurance, credit card insurance, legal aid insurance and travel insurance.
  • Carefully study the terms of the insurance before signing the contract.
  • Find out which losses the insurance covers and which losses it does not cover.