What is Endowment Insurance (“Life Insurance”)?
Annuity and life insurance companies offer their customers guaranteed benefits in old age, for example in the form of a monthly pension or a one-off capital payment. However, both products are more than just old-age provision products.
Life insurance combines the advantages of private old-age provision with the financial security of family members – right from the start of the contract. Customers can also protect themselves against risks such as accidents or disability.
In contrast to private pension insurance, financial security for surviving dependents is integrated from the outset in life insurance.
payment in the event of death
If the insured person dies before the end of the contract, the surviving dependents receive the guaranteed sum insured, and the surplus shares accumulated up to that point.
What does life insurance do?
With endowment life insurance, the customer can make provisions for retirement and protect his family at the same time. The customer is paid a one-time insured sum, which is made up of the contributions he has paid in, the guaranteed interest rate, and the profits generated by the company. The guaranteed interest rate is currently 0.9% and applies to the entire term of the insurance contract.
payment in the event of survival
If the insured person survives the agreed point in time at which the contract ends, he will receive the insurance benefit himself.
advantages
- Capital life insurance combines old-age provision with protection for surviving dependents.
- Guaranteed benefits offer old-age provisions with a high level of security. The insurance companies offer their customers a guaranteed retirement capital benefit and, to put it simply, a guaranteed interest rate on the accumulated capital of currently 0.9%. This applies to the entire term of the insurance contract. There is also surplus participation.
- Additional modules such as occupational disability or accident insurance can be agreed upon in the same contract.
Other forms of life insurance
- unit-linked
- Connected Lives
Unit-linked life insurance
Life insurance policies are also available as unit-linked products. Here the insured participates in the price gains, but also in the price losses of the underlying securities. The insurers manage this investment as a so-called special fund.
What to look out for when taking out life insurance
A life or pension insurance is a decision for many years – so you should be well informed about your pension needs. And about how much you can afford to make in the long term.
Private pensions and life insurance are offered in many variants. Everyone can choose the product that best suits their personal needs. Even current contracts can often be adapted to a changed private or professional situation.
insurance application
The insurance application determines the tariff and the scope of the insurance coverage. The applicant determines how high the sum insured or – in the case of pension insurance – the monthly pension should be. He also decides whether the insurance cover of the main insurance should be supplemented by additional insurance, such as disability insurance. If you want to automatically increase the contribution and benefits of the insurance during the term, you usually have to note this in the application.
contribution amount
The amount of the insurance premium depends on several factors. These include:
- the amount of the desired sum insured or the monthly pension
- health status
- the terms of the contract
- the selling and administrative expenses.
But the supplementary insurance also costs money and decides on the amount of the contribution. The age and state of health of the insured person, risk-relevant hobbies, and the specified sum insured are decisive here.
Insurance premiums can be paid monthly, quarterly, semi-annually, or annually. If no annual contributions are paid, installation payment surcharges may apply.
Automatic increase in insurance premiums
The automatic increase in contributions (dynamics) ensures that the insured sum “grows” over time. The premium and the sum insured increase at regular intervals – either by a certain, contractually agreed percentage or by the value by which the maximum contributions of the statutory pension insurance increase.
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