Life insurance should be taken out by anyone who wants and needs to protect themselves and their loved ones in the event of an insured event in the form of long-term disability, permanent disability, illness, death and other critical health-related life situations.
When you say life insurance
Life insurance is an insurance contract between a client and an insurance company, where the insurance company undertakes to pay a pre-agreed amount:
- The insured person in the event of incapacity for work, hospitalization due to an accident, permanent consequences of an accident, disability, certain serious diseases and other supplementary insurances.
- To an authorised (dependent) person in the event of the insured’s death.
The client pays a premium for the insurance at regular intervals, the amount of which depends on the sum insured, the agreed risks and also on your age and state of health.
Life insurance is therefore a kind of guarantee and financial security in case of unforeseen events related to a person’s health and life. Its primary purpose is to financially provide for loved ones (spouse, children) or yourself if you have no one to take care of you financially when you are without income due to an accident or illness.

How to take out a life insurance policy?
Anyone on whom their family is financially dependent should consider taking out life insurance. But for it to work as it should, it needs to be set up well. What to look out for?
- Insure yourself against the risks you face.
- Set the sum insured taking into account how much you can spare each month from your family budget for premiums, how long you want to cover yourself and your loved ones in the event of an insured event and also take into account your regular monthly expenses including mortgage, loan repayments etc.
- Life insurance includes two basic groups of insurance. Term life insurance for hospitalization, accident, serious illness, long-term disability, disability and death, and reserving insurance, where you invest part of what you pay in the financial market.
Our tip: Still not sure how to set your insurance limit? The ideal is roughly four times your annual net income.
What about taxes and life insurance?
Did you know that if you pay for life insurance, you can get a tax rebate of up to CZK 3,600 under certain conditions? The amount of the discount is based on the annual premium paid, which you can deduct from the tax base (up to a maximum of CZK 24,000).
What about cancellation of life insurance?
The insurance itself will terminate at the end of the insurance period specified in the contract and upon death. If you find yourself in financial distress, do not immediately cancel your life insurance. Try to work with the insurance company to find a solution, which may be reducing your monthly premium, deferring payment, or cancelling other additional insurance policies. What’s next? That depends on what type of life insurance policy you have taken out.
- In the case of term life insurance, the insurer will not pay you anything on termination because the premiums paid will be used to cover the agreed risks.
- In reserve insurance, which can be capital insurance, investment insurance, insurance with a savings component, part of the premium is invested in the financial markets, at the end of the policy or at the end of the policy period you will receive a certain amount of money according to the agreed policy conditions