How life insurance is updated

Year after year the price of many goods goes up and our standard of living worsens. This is why it is normal for an insurance that covers the replacement of the cost of goods or the payment of capital, as with life insurance, so that its beneficiaries can cover for a time precisely these expenses that rise every year.

It is very different what we could pay with 50,000 euros 10 years ago than what we can get with this same amount today. For this reason, it is very important to update the capital that our Life Insurance covers.

Why we should have our insurance updated

Why we should have our insurance updated

At any time we can request that the capital of our life insurance be updated, especially if there is any change in our personal circumstances. But, even if they do not change, we must also check that each year suits this higher cost of living.

The variation in the price of insurance coverage may lead to an increase in the insurance premium, and we may think that this is an economic damage, since it is the opposite.

One of the fundamental principles of insurance is the so-called premium adequacy

One of the fundamental principles of insurance is the so-called premium adequacy

This means that what we pay for insurance must be sufficient to meet the obligations arising from the contract. This principle is vital for the insured, since guaranteeing the solvency necessary for the exercise of the activity by the insurer, but it can also lead to a rise in the premium.

We must not forget that the rates of insurance premiums are not subject to administrative authorization nor should they be notified to any agency, in our case to the General Directorate of Insurance and Pension Funds. Moreover, although for years there has been a Law of disindexation that in certain contracts requires that there be no automatic updates, this does not cover insurance.

This freedom to set prices and vary them always has its limit


Which is our acceptance, but whenever we differentiate two cases:

If we have agreed to the increase in the insurance contract, with a fixed amount or with an index of variation, which is often the CPI that measures inflation. In this case, having agreed upon signing the policy, a new acceptance of the insured is not necessary.

But we can also have increases not agreed in the contract. Therefore, it must be accepted by the policyholder. For this, the insurer must inform about the increase at least two months before the contract ends, in case we do not accept the increase and wish not to renew the contract.

In any case, we must bear in mind that updating our insurance to the cost of living allows us to have adequate coverage for the risk we want to insure.

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