Why should I have disability insurance and life insurance

- The disability insurance provides you with financial assistance if you become incapacitated, while the life insurance provides payment to the survivors if you should pass away, explains insurance advisors at Tryg Mikal K. Sunde.

What is disability insurance and why I should have one?

Disability insurance provides financial support if you become incapacitated due to health problems, and helps cover the loss of income. Disability insurance is the insurance you absolutely should not skip, as the consequences are great for your finances and often also your quality of life. 

Most engineers earn well and are at risk of losing more than 50 percent of their income if they become disabled. The maximum output from NAV is only 66 percent of 6 G.

When do you have the greatest need for disability insurance?

The need is greatest when you are young, with a mortgage and a family. The consequence of losing a significant proportion of your income is great, and there can be challenges in managing debt and other expenses.

With age, more debt is paid off, children demand less, and personal finances become more flexible, reducing the need for disability insurance.

Do I have personal insurance through my employer?

There are often two types of insurance that are repeated via the employer; disability pension through the company's pension agreement and a disability capital that is the employer's disability insurance.

Disability pension through the company's pension agreement is a good solution. However, when this benefit is paid, the amount is added to the personal income of the recipient, so you have to pay tax on it as ordinary salary.

The advantage of NITO's disability insurance is that it is a so-called endowment insurance and endowment insurance is tax-free.

Disability capital from the employer is usually paid two years after the first sick leave. NAV reduces the benefit to 66% after twelve months, so you have one year of lower income before the payment arrives.

In the event of 100 per cent incapacity for work, 0.5 per cent of the sum insured, adjusted for age and applicable G, is paid monthly at the time of the insurance event. In the event of partial incapacity for work, the payment is reduced proportionately. 

NITO Disability insurance vs. private or disability insurance via work?

NITO Disability Insurance is less expensive than private alternatives. Private disability insurance costs quite a lot, which often means that young people buy lower coverage than necessary.

Better finances can result in a rejection of an increased sum insured due to health history, but as a NITO member you avoid this problem as the disability insurance is affordable so you can buy the coverage you want. 

NITO Disability Insurance provides tax-free payments after the 13th month, while private disability pensions are taxed at 20%, and those through the employer are taxed in full.

When should you consider life insurance?

Life insurance is important if you have taken out a mortgage and have a family that is dependent on your income. If you are single and renting, it is not necessary.

What are the benefits of having life insurance?

The benefit of life insurance is that it helps the survivor manage or cancel debts, allowing them to keep their home without having to sell.

Who is the life insurance paid out to? 

A life insurance policy is generally not part of an inheritance settlement. You can decide for yourself who will receive the payment from a life insurance policy.

Cohabitants have limited rights to inheritance. If you want to insure each other, you must contact the insurance company and name those who will receive payment on the life insurance. 

NITO Life Insurance has the standard beneficiary for cohabitants, which automatically applies if you change cohabitants. If you have had a cohabitant for two years, or have children together before two years have passed, then the new cohabitant is the beneficiary of the insurance agreement. Cohabitation is defined as a common address and that you live in a marital relationship.

In the case of inheritance, it is important to think through who is entitled to inheritance. Spouses can postpone the inheritance settlement until their own death, but if you remarry or have children, you must carry out the inheritance settlement. Cohabitants have limited inheritance rights and can only sit in the undivided estate of their own children, with items that were owned and used jointly with the deceased. Without joint children, the inheritance must be distributed.

Are children from a previous relationship covered by life insurance? 

Make sure that the surviving spouse can pay inheritance to children from a previous relationship and service mortgages with only one income. If you are married, you can sit in the undivided estate, but not with the deceased's children from a previous marriage. If the child from a previous relationship is over 18 years of age, he or she can accept that the stepmother/father is in undivided estate, but can claim inheritance at any time.