Life insurance is a complex area of civil law that needs to be understood at least a little. Investment insurance allows you not only to protect your property for the heirs, but also to significantly increase your own capital in a short time. In order to choose the right product offered by banks, you should be aware of its nuances.
Banking practice in recent years has shown that investment life insurance is the most beneficial product for people. With a positive development of situations, it can bring a much larger amount of income compared to deposits. It's just that it's quite difficult to understand what this type of insurance is, what its program and benefits are. Such an agreement combines two types of monetary relations: investment and insurance.
Basic provisions of insurance
An insurance contract is a guarantee instrument to protect the material or property rights of one person in terms of funds. According to general rules, a client of an insurance company can be either an individual (person) or a legal entity (company). If the subject of insurance is life, only a person can be the insured.
The subject of such a contract is always certain events, which are called an insured event. The document contains the entire list of events in which the policyholder will be paid a clear amount from the policyholder's funds.
The distinctive features of life insurance are the following points:
- The object of insurance is a person's life.
- The subject of such a relationship is a clear list of unwanted events that lead to severe physical injury or death.
- When an insured event occurs, payments are made from the company's fund.
- The fund is formed exclusively from the contributions of all clients.
Life insurance does not guarantee the safety of a person, but protects his property rights, and more precisely, the material rights of his heirs.
Distinctive features of investment insurance
The investment element of life insurance does not change its essence. We are talking about life insurance against the occurrence of unwanted situations. With this type of product, you can also additionally receive income from those insurance premiums that are always paid under the main contract. Here the insurer offers the client a choice of several financial areas, where he can invest a part of his contributions for the subsequent receipt of proceeds from this project. In such a situation, the insured, who is also an investor, takes part in any financial project, invests in stocks or bonds, and much more, which, in the opinion of the insurance company, is profitable. This type of contract does not provide for strict payment terms. A person can pay the entire agreed amount at once or ask to split it into equal monthly payments.
The main risks of life insurance include the following:
- The policyholder lived to see the end of the contract.
- The insured died as a result of an accident.
- The client died from an accident.
In any case, all the risks that the contract provides must be contained in the insurance policy. When the risk occurs, the third party indicated by the client receives not only the entire amount of the contributions transferred, but also all the money from the investment income for the past period.
Russia is a large country with an unstable economy, therefore, speaking of a high level of investment income, it should be understood that the result does not always correspond to expectations. With investment insurance, the contribution is divided into 2 parts, which are called guaranteed and investment. The first company invests in reliable projects with a small but stable income, in order to subsequently receive the amount required for the contribution from them. The second part is invested in short-term projects that have a large profit ratio. Just do not forget that the greater the percentage of financial return on the deposit, the higher the risks. The existing practice of using such a product suggests that it is much more profitable than a traditional savings deposit in a bank.
Positive characteristics of investment insurance
Investment insurance as a financial and economic product has its positive and negative sides. The main plus is getting certain tax benefits. The law makes it possible for such a category of policyholders to receive a tax deduction of 13% of the amount of the paid premium. But the state has provided for restrictions on the amount. 120,000 rubles is the maximum limit of insurance premiums for which a deduction can be provided. Also, the client of the investment direction is exempt from the payment of mandatory taxes that are levied on insurance payments. Taking into account the fact that companies, as well as clients, are not interested in losing their money, the percentage of income from investments is very high. This can also be attributed to the positive aspects of the product.
Investment insurance also has a number of legal advantages in comparison with the deposit of such a popular bank as Sberbank. From the moment of signing the contract until the onset of the period of insurance payments, all money contributed by the client is considered the property of the insurer. This means that even if the client becomes a debtor recognized by the court, no state authority will be able to confiscate this money or seize it. The payments made by the policyholder are protected even from the state and even more so from third parties. Even a spouse cannot claim these finances during the division of property.
Any person can be appointed as the beneficiary (recipient of payments) under this insurance, and not only the legal heirs of the client. Insurance payments are made to the recipient in a short time, regardless of whether he is an heir and whether he has inherited. Here inheritance and insurance law are separate and do not overlap with each other.
Negative product characteristics
The main disadvantage in this type of life insurance is the impossibility of early termination of the contract. Civil law does not provide for this possibility even in court, with the exception of situations when the contract was concluded illegally or may be invalidated. Life insurance contract is concluded for a period of at least 3 years. In practice, a period of 5 years is more often chosen. There are also other negative aspects:
- Not all possible causes of a client's death are included in the list of insured events. The exception is those situations when a person deliberately took his own life or entered into a criminal conspiracy on this basis.
- The main part of the contracts provides for the possibility of paying the heirs of a person who died in exceptional cases, at least part of the insurance premiums paid, but this does not always happen.
- Insurance companies do not have a guarantee fund from which customer funds could be returned when a license is revoked. If the insurer's license is taken away, all his clients will be left with nothing.
It should be noted that income from investment insurance is quite possible, but it is not guaranteed. If the policyholder has chosen the wrong investment strategy, the client will be left with no profit at all.
What to look for before concluding a contract
Reviews about this insurance product are ambiguous, so there are several points that you should pay attention to before signing a contract. First of all, you should understand with whom you intend to conclude an agreement: a bank or an insurance company. When it comes to banking organizations, it is necessary to carefully study the proposed product. Often bank employees offer a kind of hybrid between investment insurance and investment deposit. It is described as a product identical to a standard deposit, but with the potential to generate a larger amount of income. It all depends on the investment strategy chosen by the company.
Policyholders often do not disclose their strategy to clients in all aspects. On the one hand, they protect it from competitors. On the other hand, the client in such a situation cannot himself monitor the indicators on the exchange market of the organization in which he invested. In this case, it remains to take the insurer's word for it, and here it is better to find out in advance everything that you can about the insurance company. It is best to rely on feedback from real people who have already dealt with this fund and have seen the result of working with them.
You should especially pay attention to the proposed participation rate, on which the share of the policyholder's profit depends. Different companies have their own investment life insurance products, which have individual differences and different participation rates.
