Insurances

No one wants to imagine not being present in their family’s future. But while we all hope to live to 120, it is a responsible decision to make contingency plans to ensure your family’s financial stability.

Life insurance gives you peace of mind and gives your family a safety net.

How Life Insurance in Israel Works
In Israel, life insurance options are all term policies. Life insurance policies provide cover until the maximum age determined in the policy, or until the insured decides to cancel. If someone unfortunately dies during the insurance period, then the sums insured will be paid out to the beneficiaries. If the person dies after the end of the term, or after they cancel the policy, there is no insurance pay out.

There are no whole of life policies in Israel. As such, there is no savings component that will be received at the end of the policy.

There are two main types of life insurance policies in Israel.

1) Lump Sum
In these plans, upon one’s untimely passing, their beneficiaries receive a one-time lump sum payment of the sum insured.

2) Monthly Stipend
In these plans, one determines an amount they would wish their beneficiaries to receive each month until the age they would have reached as defined in the policy.

How the premiums change over time.
Usually, with lump sum life insurance, as one gets older, the premiums increase. Fixed premium policies are no longer available in Israel.

With lump sum life insurance plans, the older one gets, the greater the risk to the insurance company of having to pay out. While this is more affordable earlier in life, it will become a considerable expense the older one gets. As such, one can always reduce the sums insured, or cancel the insurance altogether with no penalty, when one feels that the financial risk one poses to their family decreases or is no longer relevant, as one’s family becomes older and financially self sufficient.

With monthly stipend insurance plans, the premiums in most cases will increase slightly each year, before slowly decreasing each year after a certain point in the plan. The reason for this, is that the older one becomes, the length of time the insurance company would potentially payout the monthly stipend for, reduces. As such, the risk to the insurance company likewise reduces, which is reflected in the reducing cost of insurance.

It is possible to take out a combination of both lump sum and monthly stipend life insurance, in order to both financially plan the potential risk of rpemature death, as well as keeping the premiums more palatable over time.

Insurance and Inflation
By law, all life insurances must be linked to the Madad (the Cost of Living Index). For example, if you have a lump sum type policy and are insured for 1,000,000 NIS today, and over the course of the next 30 years the Cost of Living Index has increased by 20%, the sum insured will also increase by the same rate to 1,200,000 NIS. The premiums will also likewise increase by the same Madad increases.

Tips for Olim
If you have come on Aliya or chosen to study long term in Israel, and you have an existing life insurance plan from your country of origin, you might think, “I have life insurance. I know I am covered!”

Unfortunately, this may not always be the case. You should check the following:
– Will the policy pay out now that you are no longer a resident in your original country of origin? It is futile paying premiums if the policy will not pay out in Israel.
– Will the policy cover you if you live “over the green line” in places such as Efrat, Betar Illit etc.?
– Do the policies cover passive / active war or terror?
– Where will the payout be? Will this pose a problem to the beneficiaries? Will they need a bank account in the country where the payout is made?
–
The only thing that will ensure a payout at the time of a claim is concrete evidence that the insurance company committed to paying out. Do not rely on verbal confirmation or “my friend is with the same insurance company, and they had no trouble getting a payout from overseas”.

As an example, one client of ours turned to us for life insurance cover following Aliya. The couple discovered that the wife was still covered through her policy overseas, but although both plans were taken out through the same insurance provider, albeit a year apart, the husband was not. It is imperative that written confirmation from the insurance company be obtained confirming they will pay out if needed.

If the cover will remain in place, and ticks all the relevant points above, then it may be more affordable to maintain the cover from the overseas plan, as opposed to cancelling and taking out a new Israeli plan.

Don’t Procrastinate
Discomfort with the idea of talking about death or life insurance is the biggest stumbling block to taking this very basic step to take care of your family. We hope none of our clients will ever need to take advantage of their life insurance policies, but we’re glad to know that they and their families now have financial peace of mind.

As mentioned, there are various types of life insurance plans available in Israel, and the most appropriate plan for any individual will be based on the specific needs of their family.
Get a free, no-obligation consultation with someone from our team who can help guide you to the ideal life insurance plan for you.