Insurance

Private Retirement Provision

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Private Retirement Provision. Various strategies can be selected for long-term asset accumulation depending on the individual life situation, age and willingness to take risks. In addition to securities, funds or real estate, insurance is also offered as a pension product.

The essentials in brief:

  • To cover your financial needs in old age, there are various private pension strategies.
  • Which variant is best for long-term asset accumulation depends on factors such as your individual life situation, your age and your willingness to take risks.
  • With the help of a capital life insurance, a private pension insurance or a unit-linked life and pension insurance, you can save up for your retirement.

The private retirement provision is basically nothing more than a long-term wealth accumulation. Depending on the particular life case, various tactics may be picked. Insurance is also sold as a pension product, in addition to shares, funds or real estate. Age and willingness to take risks also play a decisive role in the choice.

Endowment life insurance

Endowment life insurance always includes two contracts: term life insurance to protect relatives and a savings plan with a long term. At many companies, however, customers do not find out how the premium is divided between the two parts of the contract. At the end of the term, the payout is made up of a guaranteed amount and a non-guaranteed bonus.
Customers of low-income companies have experienced in recent years that the surpluses sometimes tended towards “zero”. Unlike in the past, the contributions can no longer be deducted from tax. 

PLEASE NOTE WITH THE ENDOWMENT LIFE INSURANCE:

  • If you are not pretty sure whether you can keep up the term, you should not take out endowment life insurance. Because: canceling beforehand means loss!
     
  • Survivor protection can also be topped up with a considerably cheaper term life insurance.
     
  • Those who primarily want to save are better off choosing other forms of savings. There is usually the advantage that the paid-in capital can be accessed at short notice. And this with better and more calculable profits.
     
  • Endowment life insurance can be useful as part of a company pension scheme, for example as direct insurance. Then tax advantages beckon to the insured.
     
  • Anyone who decides on capital-forming  life insurance despite the disadvantages shown should pay the contributions annually. That saves surcharges. In an enclosed  accidental death insurance can be dispensed with. It is unnecessary and too expensive.
     
  • Agree to include the additional insurance “Exemption from contributions in the event of occupational disability”. In the event of occupational disability, the insurer will then continue to pay the contributions for the entire contract. This is not absolutely necessary if you already have (independent)  occupational disability insurance and the agreed pension is so high that the contributions can be borne without any problems.
     
  • High-performing companies should always be chosen to take out insurance. The experts at the consumer advice center and insurance advisors provide an overview of the market.
     
  • Advice and current contribution comparisons can be obtained from the advice centers of the consumer advice centers. Many also offer computer-aided, specific price-performance comparisons. Judicially approved / officially approved insurance advisors also provide an overview of the market.


Private pension insurance

When you opt for a private pension fund, you will be given an old age pension. But for the buyer, only half of the payout is certain. The other, non-guaranteed part, the so-called “profit annuity”, can be reduced by the insurer, for example depending on its business success. Private pension insurance usually offers two types of contract: the deferred pension and the immediate pension.

Please note with private pension insurance:

  • Anyone who takes out deferred pension insurance, ie the pension payment does not begin until a later point in time, must bear in mind that if they terminate prematurely they must expect major losses.
  • The contribution to a pension that starts immediately, ie the policyholder pays a single premium into the contract and immediately receives the monthly pension payment, can no longer be reclaimed. Therefore, only part of the assets should flow into the immediate pension in order to remain financially flexible.
     
  • If you agree to a so-called lump-sum option for the end of the savings phase with the deferred pension insurance, you can then decide shortly before the start of retirement whether you want to collect the savings in monthly bites or in one fell swoop.
     
  • If the repayment of the contributions plus the accumulated surpluses in the event of death during the savings phase or a pension guarantee period after the start of the pension payment is agreed, the surviving dependents may still have some of the savings after the death of the insured person.
     
  • Contributions should be paid annually. That saves surcharges.
     
  • With the deferred pension insurance,  agree to include the additional insurance “Exemption from contributions in the event of occupational disability”! In the event of an occupational disability, the insurer will then continue to pay the premium for the entire contract. This is not absolutely necessary if you already have (independent) occupational disability insurance and the agreed pension is so high that the contributions can be covered without any problems.
    High-performing companies should always be chosen to take out insurance. The experts at consumer advice centers and approved insurance advisors will give you an overview of the market.
  • Advice and current contribution comparisons can be obtained from the advice centers of the consumer advice centers. Many also offer computer-aided, specific price-performance comparisons. Judicially approved/ officially approved insurance advisors also provide an overview of the market.

Unit-linked life and pension insurance

The difference to other forms of life and annuity insurance with the unit-linked variants is that the deposited money is invested in investment funds, for example stock, pension or real estate funds. Since the customer usually decides for himself which funds he wants to invest in, he can change his choice at any time. With this type of investment, however, he alone bears the risk!

As a rule, there is no minimum payment, as is the case with endowment life insurance. What is paid out is what the fund has generated, and that is initially uncertain. Fund policies with high-yielding companies may again become a recommendation for more risk-averse investors. 

Please note with unit-linked life and pension insurance:

  • If you need a fixed amount at a certain point in time, you should refrain from fund policies, as the rate is not always the same.
     
  • Before signing a contract, it is advisable to take a look at the so-called “zero line”. This is a development curve of the fund shares, in which a possible increase in value is not taken into account. Anyone who compares the zero lines of several providers receives an indication of where the contributions are likely to be better placed.
     
  • Contributions should be paid monthly. If you pay annually, there is a risk that you will buy when the fund price is particularly high. A unit-linked life insurance does not need to include an additional accidental death insurance. It is unnecessary and too expensive.
     
  • However, agree to include the supplementary insurance “Exemption from contributions in the event of occupational disability” or take the contribution into account when taking out a disability pension.

Hello, I have been working as an investment consultant and author for more than 20 years. I love what I do and I have enriched everyone around me. A lot of money is not important, the main thing is how you use the money.

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