Great economic difficulties threaten if the breadwinner of a young family drops out. Statutory pension entitlements, including survivors' benefits, are low if the deceased has not yet completed long periods of insurance or has paid in only a little so far.

Widows' and orphans' pensions are rarely sufficient to provide for the family after the death of a parent. Especially if you take out a large loan - for example, to finance a house - you should take out term life insurance. In the event of an emergency, your relatives can then repay this loan with the insurance benefit of the term life insurance.

When the main breadwinner of a family dies, it is not only a personal catastrophe for the surviving dependents, but often also a financial disaster - for example, because loans taken out when the family was founded become due. At least term life insurance can protect against financial ruin.

Indispensable for young home builders
Term life insurance is particularly important for young families with one or more children who have built or bought a house and therefore have hardly any financial reserves. If both spouses earn an income, a linked term life insurance policy can also make sense - it pays the surviving partner the full sum insured in the event of the death of one partner. Compared to two separate policies, you save about ten percent this way.

Loan protection through residual debt insurance
Residual debt insurance is a special form of term life insurance. It covers the exact amount that the borrower still owes in the event of his or her death. This ensures that the remaining debt can be paid by the surviving dependents in the worst case scenario.

Unlike endowment insurance, term life insurance only pays out if the policyholder dies during the term. For this reason, term life insurance is also several times cheaper than policies with capital accumulation. Even with the first premium payment, you can be sure that your family is well covered in the worst case.

Price comparison is particularly important
The benefits are almost identical among the various providers - if the insured person dies, the dependents receive the amount that was agreed upon when the contract was concluded. If the contract ends during the lifetime of the insured, no benefits are due.

Because the benefits are largely the same, experts therefore advise paying particular attention to a favourable price in term life insurance. As a thirty-year-old non-smoker, you already get risk protection of 150,000 euros for an annual premium of less than 120 euros, which is paid out to your relatives in the event of death.

When you sign the insurance application, you usually grant the insurer the right to check the health data you have provided with your family doctor or other medical practitioners.

If you have numerous or severe pre-existing conditions, the insurer may demand a risk surcharge on the premium or even reject the application altogether. The reason: the special risk of death of people with severe pre-existing conditions should not be passed on to the community of all those insured with the company.

Health information is checked and evaluated
The applicant, the insurer and, if applicable, the life insurance intermediary each receive a copy of the insurance application. The health information is assessed by a medical professional of the insurance company.

If there are no abnormalities, the insurance policy is issued and sent to the applicant. With the delivery of the policy, the life insurance cover then legally comes into effect.

Some insurance companies offer not only endowment but also term life insurance on linked lives. A linked life insurance policy insures two or more people in a single contract. If one of the insured persons dies, the death benefit is paid to the survivor(s).

This can be particularly useful for married couples - but also for business partners who run a joint business, so that financial obligations entered into jointly can be repaid after the death of the partner without the remaining person getting into financial difficulties.

Conversion to endowment life insurance

Most life insurers grant their customers the right to convert a term life insurance policy into an endowment policy within the first ten years after taking out the policy. A new health check is usually not necessary when converting. 

Those who want to make additional financial provision for their old age can make use of this conversion right. At the end of the contract, you will also receive money - the contractual maturity payment including guaranteed interest and additional surplus participation.

With endowment life insurance, you therefore achieve two pension goals at the same time - risk protection for your family and a good return on your savings.