For decades, endowment life insurance was the epitome of secure but profitable investment. This image has recently received significant scratches, because of the extremely low key interest rates, namely, the guaranteed interest for life insurance policies have fallen into the basement . Currently, insurers are still guaranteeing 1.75%, but experts are predicting a further decline in interest rates to around 1.25% already next year. Although the insurers like to refer to the profit participation by the many insured on a decent total return, but this bonus is not safe and can be completely eliminated.
Many consumer shooters now advise against the conclusion of a new life insurance policy and not a few insured play with the idea of their old policy to terminate .
When terminating an endowment life insurance policy, most of the accrued income usually remains with the insurance company. Therefore, it is often better to save a bad interest rate policy until the end of the contract. An exception are contracts that have only been running for a few years, for which the deductions are less significant.
For old contracts , which were closed before 2004 and still include a good guaranteed interest, dismissal is not recommended. Those who urgently need the capital saved can sell their life insurance policy to a second-hand buyer . These are companies that specialize in the purchase of existing life insurance contracts. Compared to insurers’ meager repurchase offers, they have much more to offer.
For unit-linked life insurance , the insured person acquires shares in securities funds with his contributions.
He has the choice between relatively secure bond and fixed income securities funds or risky equity funds . This type of life insurance offers enormous potential returns but also high risks . There is no guarantee interest, the profit is unique and depends on the performance of the selected fund. The contract ends on a specific effective date, then the fund units are sold on the stock exchange and the investor receives the contractually agreed share of the proceeds. With the unit-linked life insurance theoretically also a total loss of the deposited contributions is possible. However, there are policies that guarantee at least the security of the paid-up capital .