Still worth the life insurance? Do not move products provider only money investment vehicles are affected by the current low interest rate environment such as fixed-term deposits and overnight. Classic pension fund products such as life insurance into distress by persistently low interest rates. Because many old contracts have guaranteed interest amounting to 3.5 or even 4 percent agreed. Such returns are even with a successful investment strategy but little still generate. The life insurers adapted to their new environment so their products.
How life insurance works the principle of a life insurance policy is quite simple: the policyholder pays contributions in the life insurance over a period of time. On one he secures his relatives thus financially in the event that anything should happen to him (life insurance). The survivor’s protection is just one aspect of a capital life insurance. The pension is much more important. Because the policyholder reaches the end of the contract term, so he or she receives Benefits from life insurance. This performance, usually in the form of a one-off payment, should of course exceed the amount of the contributions. In traditional life insurance products, a guaranteed interest rate is agreed in the insurance contract. But the policyholder is involved normally surplus, if the insurer manages well.
So the actual yield is usually higher than the guaranteed interest rate can be expected. With the low interest rate environment, this former model but becomes a problem, because insurers can no longer reach the hoped-for return. ERGO with new life insurance after the Alliance therefore now she announced ERGO a new life insurance product. This promises higher returns than traditional life insurance, can offer only little security. So, the featured product offers no warranty interest, but only secures a payout of paid premiums to the insured. ERGO will it invest a higher proportion of contributions in shares and so try that. a higher yield to generate than is possible with safe investments. Individual examination of pensions in addition wants to ERGO for more transparency ensure and better identify the costs incurred for such life insurance. Whether this new product but really suitable for private pension plans, must be examined individually. On the one hand, there are other variants of old age pension, on the other hand expects that will pull more insurers with new products and change the life insurance generally. Without a professional advice, it is therefore difficult to make an informed decision for the consumer.