Question of the week: Is life insurance still useful?05/09/2018 Curtis Cales Comments Closed
Friday, 24.11.17 , written by Annabell Meyer For a long time, life insurance was an integral part of retirement provision for many people. This has changed, especially for younger savers, due to the low guaranteed interest rate. There are still very good offers, as a new test by the Institute for Pension
A life insurance hardly makes sense to many people
According to the German Insurance Association, there are around 85 million life insurance policies nationwide. When they graduate, insured people rely on building up a secure cushion for their old-age provision. However, this is often the problem given the persistently low interest rates . Hedging is often a poor return on investment . Many people therefore doubt whether a life insurance is still useful.
In addition to the potential return savers should take into account in the hedge also how stable the respective companies are and how it is ordered to their financial strength. To find out which providers convince with a good company quality, a recent test of the IVFP 71 life insurers on the tooth felt .
Quality decides: That’s what makes a good life insurer
The experts of the IVFP examined the quality of various life insurers on the basis of the four sub-areas of stability, security, earning power and market success . Among other things, it was decisive how high the customer base and the premium income are currently. Their development and growth in recent years has also been scrutinized by the experts.
Almost two thirds of life insurers were rated better than 2.0. The alliance achieved the top mark of 1.0. Other top providers from the rating are:
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How useful is life insurance still?
Although there are still some good life insurers on the test, there are many doubts about the hedge. Many people wonder if life insurance still makes sense, especially because of low interest rates. However, the insurance has some key benefits. An important plus, for example, is that savers enjoy relatively high security . Because insurers have to invest their contributions with little risk, since they have to pay them out at the end of the contract period at least with the agreed interest rate.
A life insurance policy also offers insureds the opportunity to protect their loved ones in the event of death. If the customer dies, his survivors receive the life insurance money and can thus close the financial gap that is created by the death of their dependents.
In addition to traditional life insurance, savers also have the option of using their unit-linked alternative to earn more from their contributions . With this type of hedge, the contributions are invested in funds. Their performance determines how much money insureds ultimately receive. Again, however, customers often have the option to set a minimum amount for their later disbursement.
For many experts, life insurance makes hardly any sense
Despite its advantages, life insurance, according to numerous experts, makes little sense. Low interest rates below one percent make hedge no longer profitable. Because customers not only get low interest on their paid-in contributions , but also paid less surpluses from the insurer.
In addition, life insurance policies have a very long term, which makes hedging often inflexible. Although the contract can be terminated at any time. However, then insured threatens a high loss. In addition, critics say that many contracts are not transparent enough, so that customers often do not know how much money they are entitled to .
As an alternative to life insurance, it is advisable for pensioners to seek information and advice on various alternatives for old-age provision. Depending on their life situation and the desired conditions, they can choose between various options such as a private pension insurance or a company pension plan.
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