Investment Life Insurance
Investment Life Insurance (IE) is a combination of insurance and regular investment in mutual funds. Many financial advisors offer it for long-term savings. Warning! IE should primarily serve insurance. Investing should not be the main reason for closing it.
In the IE, part of the premium covers the insurance company’s costs to cover insurance risks and part is valued in mutual funds. It is a more modern type of provisioning insurance than capital life insurance. It offers quite a lot of flexibility in both insurance and investment options.
Insurance coverage in IE
Investment life insurance provides comprehensive security for individuals and families. Any insurance risks can be negotiated here. Among the most important are death insurance, permanent injuries and critical illness insurance.
The price for insurance varies in every insurance company and therefore it is necessary to choose one where the price and insurance coverage is balanced . Account must also be taken of the exclusions that apply to insurance cover.
The right choice of insurance risks and the setting of insurance amounts is extremely important in insurance . As a result, you do not pay the funds unnecessarily and you have a cover for your current situation. Read more about “How to set up life insurance effectively”.
The insurance premium for the main insurance is set by the client in the draft insurance contract. Premiums (death cover) are based on the sum insured for death, insurance period, age, sex, risk group and investment component.
Example of premium payments in IE
Input data used to recalculate:
- age 30,
- insurance period 35 years
- insured sum (PS) to death for any reason 30,000 €
- PS permanent consequences after injury 30.000 € with progressive fulfillment 500%
- PS Critical Illness € 10,000 (10 Years Rate)
- the investment component is set to a minimum.
Monthly premiums in this case are € 24.20.
Investing through Investment Life Insurance
Investment in IE is associated with an insurance cover. Even with this insurance, an ordinary person can use capital markets to capitalize on their funds and create a long-term reserve. Funds are invested in mutual funds .
IEP is primarily an insurance product. Investing is in second place. More information about investing in IE, its advantages and disadvantages, I write in this article.
What do you get at the end of the insurance?
At the end of the insurance, the current value of the units is paid out . In life assurance, the amount paid on life expectancy is not guaranteed as is the case for life assurance. The positive difference between the invested premium and the value of the account at the end of the insurance is capital income and is taxed on income tax.