Cumulative insurance in Europe: reviews

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

All kinds of insurance services have long and firmly entered our lives. Every year we protect our he alth with policies, be sure to insure a car, and sometimes we purchase additional programs. Endowment insurance is one of the few services that the vast majority of Russians have no idea about. While in European countries such a policy is commonplace and even necessary to some extent. Over many years of practice, people are accustomed to saving money in this way. Moreover, the UA policy protects the most valuable thing a person has - his life and he alth.

Although human life is priceless, this does not mean at all that it is not necessary to appreciate it. Approximately this way of thinking has every third European. It is thanks to this that endowment life insurance in Europe has been developing for many years.

What is this?

This policy is a bit like a deposit. NSJ -long-term investment of funds with their subsequent accumulation and investment to obtain surplus income.

You can conclude such an agreement from 3 to 35-40 years. It can be viewed as a kind of piggy bank that additionally protects you from costs in the event of death, serious illness, injury, disability and other possible risks. If any of the above happens to you, the company will pay you the full amount. If everything goes well, the funds will continue to accumulate.

Monthly contributions to endowment insurance are divided into two parts:

• to pay for possible risks;
• to form a piggy bank.

The savings can be invested in various financial models to generate ancillary income. After the contract expires, the client can independently decide whether he wants to receive the entire accumulated amount at once or prefer even payments in the form of an increase in pension.

If we talk about Russian legislation, then it can be argued that such amounts are not subject to taxation. Also, they cannot be recovered in favor of third parties, even in court. That is, only the client himself and no one else can manage the funds. Insurance (cumulative) in Europe has almost the same benefits.

What is the difference between risk insurance and funded insurance?

Under the risk policy is understood this type of contract, when the sum insured is paid 1 time. At the same time, the contract stipulates quitea large amount that will be paid to the client upon the occurrence of an insured event. However, if nothing happened to you before the end of the contract, the deposited money remains with the insurer.

The situation looks different when the insurance is cumulative. In Europe, you purchased a policy or in Moscow, it does not matter. This is where you have to pay monthly. If you have free funds, you can deposit the amount immediately for the year.

The company continuously invests the funds accumulated on your account and tries to increase it. This is where the income of the insurer lies. Money is redistributed to two types of income:

• Guaranteed. The income here is quite small, it can vary from 3 to 5%.
• Optional. This part will depend on how successfully the company was able to invest your funds. It can be either 2% or 15%.

If an insured event does occur, the client immediately receives the full amount specified in the document. It does not matter how much money he managed to deposit.

For example, you have signed a 10-year life insurance contract and must pay $5,000 annually. But two years later you had an accident, became disabled and lost the ability to work. Under the terms of the contract, you will receive all $50,000, despite the fact that you only managed to deposit $10,000. If nothing bad has happened to you in all ten years, the company will return all 50 thousand to you and even charge some interest on top, if this is provided for by the contract. That is why insurance is cumulative. In Europe, such a policy hasevery third. Let's see why.

Historical background

The first insurance policies appeared in ancient Greece. But in Europe, such a phenomenon became popular only by the beginning of the 18th century. Life insurance was pioneered by James Dodson. He personally traveled to all the cemeteries in London and rewrote the dates of life and death on all burials a year ago. In this way, he calculated the approximate life expectancy of the average Londoner and calculated how much the insurance premium could be. But only after 77 years, insurance (cumulative) in Europe has become more or less massive. Since then, there have been many more insurance companies offering this service. And some of them are still working today.

Current affairs

About 70% of all payments today are in the UK, Germany, Italy and France. Most companies in this segment have a solid reputation and vast experience. It is this fact that makes endowment life insurance so popular.

Insurance companies cover almost the entire population with their services. In eight out of ten families, all members, including babies, have policies. Some Europeans have several insurances at the same time with different accumulation conditions. On average, Europeans spend up to a quarter of their income on insurance programs. Here, such a tool is a reason to accumulate additional funds for the education of the child and an increase in the pension. Therefore, cheerful grandparents, traveling around the world and cheerfully clickingcameras, no one is surprised anymore. They can afford it.

European legislation allows investing clients' money exclusively in the accounts of the largest banks or in shares of profitable enterprises. The responsibility of the IC is additionally guaranteed by international reinsurance companies. This means that the money of customers in any case will not go anywhere. With this level of reliability, such insurance is akin to a very profitable deposit.

Single European insurance market

As you probably understood, endowment insurance in Europe is a very responsible business. Back in the middle of the 20th century, several European countries began to form a single insurance market. The central body is called the European Insurance Committee, and its main office is located in Brussels. The goals of such an event are quite serious:

• development of common standards for the work of all organizations that deal with insurance;
• implementation of the strictest control over compliance with the developed agreements.

Requirements for organizations

Insurance providers must adhere to the following rules:

• it is forbidden to additionally engage in any other type of activity other than the provision of insurance services;
• top managers and owners of companies are required to bear full mandatory responsibility for customer losses, have no criminal record and sacredly honor the letter of the law;
• the company must have a guarantee fund capable ofensure all necessary payments.

Today, any insurance company licensed to provide insurance services in any EU state can offer similar services in other countries, members of this union.

Popular Companies

The list of the most popular European companies providing endowment insurance (they have the most positive reviews) looks something like this:

• Munich Re - Germany;
• AXA - France;
• Powszechny Zakład Ubezpieczeń (PZU) - Poland;
• Assicurazioni Generali - Italy;
• Vienna Insurance Group - Austria;
• GRAWE - Austria;
• Allianz - Germany;
• Legal & General Group - United Kingdom.

These companies offer a wide variety of programs for both adults and children. Using one of them, you can easily save money in case of disability or for any specific event (training, wedding).

In the middle of the last century, the so-called investment insurance began to gain momentum in Europe. Its main difference from the accumulative one described by us is that during the entire term of the contract, the client can independently manage the funds. That is, you can decide for yourself where to invest money, and where not. But there is also a negative point: responsibility for the decisionalso borne by the policyholder.

Conclusion

It is likely that over time the practice of accumulative insurance in Russia will become as popular as in Europe. And soon Russian citizens will appreciate the literal meaning of the expression “the value of life.”