Panama Insurance – Know How to Protect Yourself
Mortgage insurance is required if you borrow money from the bank, you will be required to purchase life insurance naming the bank as the beneficiary, meaning the mortgage will be paid off upon the homeowner's death.
Panama Life Insurance
Life Insurance in Panama is not much different from similar policies in other countries. There are 2 types of life insurance policies in Panama which are similar to those offered in the U.S: Term Life Insurance and Universal Life Insurance.
Term life insurance expires after a specific time period while universal life insurance includes a low premium and an increase in policy value over time. Brokers will be able to help you find the right policy for your circumstances.
The use of brokers is a very common practice in Panama as they can help you compare all those which are available to you and find the most cost-effective premium. You are entitled to choose your own insurer and no company can pressure you into taking any insurance. To put that into perspective, the bank may insist you on having a fully comprehensive car insurance policy, but you are not obligated to buy theirs. You might be able to receive discounts if you are buying several policies from one insurer.
How to make claims will vary from insurer to insurer, but most claims can be started with a simple phone call. What follows up may be the need to complete a number of forms or a visit from the company. You will be met with a claims handler who talks you through the process and ensures that your claim is dealt with properly.
Recap on the understanding of each type:
1. Term Life Insurance is a policy with a fixed rate of premium payments for a specific period of time. When that period ends, the coverage is no longer guaranteed, meaning the customer has to either walk away or take another policy which can have different premiums and conditions. If something unfortunate happens to the insured during the set term, death benefits will be paid to the beneficiary.
When it comes to buying real estate and a mortgage, the lender will require the purchaser to buy a life insurance policy naming the lender as the beneficiary which ensures the mortgage will be paid. As we discussed above, Panama lending institutions also require the borrower to obtain a life insurance policy naming the lender as the beneficiary.
2. Universal Life Insurance (aka Whole Life insurance with Savings) consists of two components – a cost of insurance (COI) amount, and the cash value, a saving component. The cash value earns interest as if in a bank account. Every month the cost of insurance (COI) fee along with any other fees or charges are debited from your bank account under the policy. Even if no premiums are paid in a given month, these fees and charges will be deducted from the total cash value. The earned interest usually contains a minimum percentage stated in the contract. Sometimes, the earning rate depends on a financial index (e.g. government bonds or stocks), also known as an "Equity Indexed Universal Life Insurance" policy.
These life insurance policies must be bought at a Panama life insurance company. Life insurance policies are offered by most Panama insurance companies.
You can buy a policy without doing a medical exam at some Panama life insurance companies. Nevertheless, buyers over the age of 50 who want to purchase a policy over $100,000 USD will be required to do a complete physical medical exam and medical lab tests before being accepted by the Panama life insurance company.
Panama Fire Insurance
Panama fire insurance policies are similar to those found in the U.S., Europe, and Canada.
Panama has fire insurance policies available from most general insurance companies. A basic Panama fire insurance policy includes coverages for fire, explosions, earthquakes, lightening, windstorms, floods, water, and falling objects damages with debris removal.
Depending on home location and the construction type, Panama Fire Insurance rates will vary. While cement construction will be the lowest rates, they will charge a slightly higher premium on a composite of wood & cement. The highest rates are wood structures. Regarding locations, buildings in or near major urban vicinities will pay favorable rates, while those located in rural areas and islands (such as Bocas del Toro) pay higher rates.
Panama Car Insurance
If you are renting a car, car insurance is important in Panama, but this is an expensive way to motor because rental insurance equals daily premiums. Car owners will require collision insurance and liability insurance, which is very important for foreigners to take note of because they are likely to be accused of being responsible for a collision simply because they are not local.
There are two different types of car insurance in Panama. Certain cars can be covered fully, but they must be those which have been made since the year 2000. Insurance policies for these types of cars give them cover for civil responsibility which covers personal injury and property damage, medical costs and assistance along with coverage for the driver's own car for collision.
The second type of car insurance is just Civil Responsibility, which covers and personal injury coverage for the other driver as well as damage to their cars and property. The policy can also cover medical costs for those people travelling in your car, but this will vary between insurance companies. The older the vehicle gets, the higher the policy costs (which will increase with time) as it is considered that they are more at risk of an accident and in the event that the insurance company needs to arrange a repair, the parts needed may be hard to find and/or expensive to use.
Car insurance companies will calculate their own rates of depreciation for a car. It is usually 20% in the first year and then 15% each following year. In order to obtain car insurance, you must have a valid driver's license. If you are buying a car with a loan, you will be required by the loan company to have a policy which provides full coverage.
