Today, insurance companies are actively offering programs to the population that provide for payments in case of survival to a certain age. They are aimed at middle-aged and elderly people, but few of them can understand the nuances of this insurance format. Let’s take a closer look at these programs.
What is this insurance
Life insurance is a product that integrates several functions at once:
- Accumulation and increase of financial resources.
- Protection of the property interests of the counterparty in the event of death or reaching a certain age.
This program is called mixed life insurance, because the payout is due not only when the client dies, but also after the expiration of the agreement. Life insurance for survival is mutually beneficial for both the client and the company. The first can count on monetary compensation in these cases, and the insurance company gets the opportunity to invest the principal’s funds in profitable projects (real estate, lending, purchase of securities, etc.). In this format, the insurance premium is positioned as a kind of contribution (only not to the banking, but to the insurance structure).
The client must take into account that life insurance (regardless of the type of risk) provides for a payment equal to the amount of premiums paid and income from investments.
List of risks
Most companies include the following risks in the contract:
- surviving to a certain date.
There are some features of survival insurance when the person concerned draws up a fixed-term contract. Often, its terms establish that at the time of termination of obligations between the parties, the age of the client should not exceed 75 years. The agreement also stipulates the frequency of transfer of contributions (monthly, quarterly, every six months, etc.). For an additional fee, the insured has the right to expand the list of risks, for example, by adding disability, disability to them.
Types of life insurance
Companies often offer counterparties two formats of survival policies:
- NSZh (cumulative life insurance);
- ILI (investment life insurance).
These programs differ from each other and have their own characteristics.
The nuances of the storage system
1. The term of the contract varies from 3 to 50 years.
2. The limit and frequency of payment of contributions are set by the client.
3. Profitability under the program is from 5 to 7% per annum.
4. Upon the occurrence of an insured event, the client receives a payment (even if he has lost his ability to work, the insurance company will make contributions for the client and will pay money at the end of the contract). The accumulative system allows, through regular contributions, to accumulate funds for an expensive purchase – a car, an apartment.
The program is mainly chosen by the self-employed, persons of pre-retirement age, as well as parents who, in the foreseeable future, will have to decide on the issue of paying for the education of their children. Many clients spend the money received on the formation of their own pension, the purchase of transport or the solution of the “housing problem”.
Another preference is the opportunity to receive a tax deduction. If you have official earnings, from which 13% of personal income tax is deducted, the insurance program allows you to return part of the money.
The nuances of the investment system
1. The term of the contract varies from 3 to 5 years.
2. The amount of contributions is determined by the client.
3. Profitability under the ILI program is not guaranteed, as it depends on market conditions.
4. The client independently chooses an investment program taking into account the risks, and profitability depends on them.
5. The client has the right to expand the list of risks that will be compensated by insurance.
As part of the ILI, you can create a solid “airbag”. A policy is both an insurance and an investment product. The client independently chooses an investment strategy. Many adhere to the traditional model, when one part of the capital is invested in reliable instruments, such as OFZ or a bank deposit, and the other part is invested in riskier programs that provide maximum returns (crowdlending, IPO, options).
ILI is aimed at clients who are constantly looking for ways to increase their capital. But in order to provide a solid material basis, you will need a solid amount for a lump sum payment. The insurance company needs it for investment. As soon as the term for fulfilling contractual obligations expires, the client will receive money “with interest”.
The program should not be considered as an alternative to a regular deposit. Early termination of the ILI policy is fraught with significant financial risks for the client. Formally, the client can reduce the contribution rate, change the term of the contract down and give it the status of “paid”, but in all cases he will incur significant costs.
Who will receive payments
The life insurance contract often contains information about the policyholder and the insured person. The obligation to pay premiums may be assigned to the insured, who will receive payments upon the occurrence of an insured event.
If both the policyholder and the insured person are the same person, then the monetary compensation is addressed to:
- to the policyholder (if the date of survival comes);
- beneficiaries (if the insured dies).
The question of who has the right to take out life insurance remains relevant. The main requirements are compliance with the age limit and state of health. A person who has reached the age of 18 can become an insured. The age limit for the beneficiary is 65 years. Under the NSZh program, parents have the right to insure their own child (from the moment of birth to 17 years).
The price of insurance for survival to a certain age and in case of death depends on the tariff policy of the company. The minimum cost of the policy starts from 5,000 rubles, and the maximum can reach several hundred thousand a year. Pricing for an insurance product depends on several factors:
- gender and age of the insured;
- areas of professional activity and occupation;
- health conditions;
- the list of insurance risks and the period of validity of the contract.
Features of the registration procedure
Personal insurance of a citizen for survival is carried out on the basis of an application and a passport. The health status of a person is assessed based on his age, predisposition to diseases and the limit of the sum insured. Often, companies offer to fill out a medical questionnaire, which indicates information about possible diseases:
- digestive system;
- respiratory system;
- of cardio-vascular system;
- genitourinary system;
- nervous system;
- organs of internal secretion;
- musculoskeletal system and others.
The applicant also notes in the questionnaire the presence of bad habits, disability and fixes the conditions of the work performed.
Contractors of pre-retirement age are required by companies to undergo a comprehensive medical examination to check their health status.
If a person deliberately hid the diseases diagnosed in him, the insurance company has the right to legally decide to refuse payments. Also, the beneficiary will not receive monetary compensation if the information specified in the questionnaire is found to be unreliable.
Advantages and disadvantages of an insurance product
One of the main advantages of the program is the guaranteed receipt of money regardless of whether an insured event has occurred or not. Survival insurance allows not only to return the invested funds, but also to withdraw interest as part of the investment income. But the benefits of the insurance program are not limited to this. These include:
- preservation of capital from the beneficiary in the event of divorce (monetary assets are not subject to division);
- prohibition on confiscation and arrest of money invested in insurance;
- the possibility of returning part of the investment due to a tax deduction (the limit on the contribution is 120,000 rubles);
- preference for the choice of currency when investing funds;
- the ability to appoint any person as the beneficiary.
But the life insurance program is not without flaws. When choosing an HOA, the client should consider the following points:
- low percentage of profitability;
- financial risks in case of early termination of the agreement;
- the fact that the program is not integrated into the deposit insurance system (if the company goes bankrupt, the client will receive only a part of the investment).
When drawing up an ILI contract, the client must remember that there are no guarantees of additional income. The investment system is also not included in the deposit insurance system, and early cancellation of the agreement is fraught with financial risks for the insured. But you can return the money in full during the cooling period, which takes from 14 to 30 days from the date of execution of the contract.
If the applicant missed this deadline, then only a part of the capital, which is commonly called the redemption amount, will be returned to him.
Life insurance is one of the effective tools for accumulating and increasing your own savings. It allows you to build up capital within 3-5 years, which can be spent on educating children, acquiring housing, and buying a car. A long-term investment strategy makes it possible to provide a solid material foundation in 10-20 years. But when choosing this format of insurance, one should take into account the risks of the situation in the economy, bankruptcy of the company, lack of guaranteed profitability and incurring losses in case of early cancellation of the contract.