Life insurance

What is life insurance?

A life insurance is a contract between an insurer and a policy holder. In exchange for paying a premium the policy holder’s beneficiaries will receive pay-out when the insured person dies. The amount that is payed out is agreed upon when applying for the policy.

There are mainly two different types of life insurance plans in the Netherlands::

• Term life insurance: only covers a certain time frame, such as 10, 20 or 30 years.
• Whole or permanent life insurance: builds cash value and always pays out. This can be considered a funeral or burial insurance.

On this site we only compare term life insurance policies.

Why should I take a term life insurance?

A life insurance can be important for anyone who has loved ones who depend on them financially.

Example 1

You are the breadwinner of a family of four. When you die, a life insurance can help replace your monthly income for a long time. This way your family members can keep the house and pay for the monthly expenses, such as:

• Mortgage costs
• Utility bills
• Groceries
• Children’s tuition fees

Example 2

Together with your business partner you co-signed loan for your business. When you die, your financial partner will end up paying for the loan all by him or herself. A term life insurance can cover the costs of the debt and be timed to end with the debt payments.

Example 3

You are planning to get a divorce or are already divorced. You or your partner may pay alimony to provide for your children. But when the person paying the alimony dies, financial problems may arise. Term life insurance:

• Can cover years of support payments (alimony)
• Can pay for your children’s study plans and/or student house rent

Types of term life insurance plans

There are three different term life insurance plans in The Netherlands that you can choose from. It is wise to get familiar with the different options. Consult a financial advisor if you have difficulties with choosing the right plan in your situation.

1. Stable cover

A term life insurance (in Dutch: gelijkblijvende overlijdensrisicoverzekering) has a stable cover that will always pay-out the same amount within the insured time-frame. The premium will also remain stable in most cases.

2. Linear decreasing cover

With a linear decreasing cover (lineair dalende dekking) the life insurance company pays out a gradually lower amount as every year passes. For every consecutive year the cover is reduced in equal steps  At the end of the insurance term the cover is 0.

3. Annuity-based cover

With an annuity-based cover (annuitair dalende dekking), the cover remains quite high in the first years of the insurance term. But as the term of the life insurance progresses, the covers starts to go down more and more. The speed at which this happens depends on the annuity percentage. Near the end of the insurance term the cover approaches 0.