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Life insurance: Important information

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Life insurance can be taken out in three different forms. Which one is the right one depends primarily on the individual life situation.

Term life insurance

Unlike endowment life insurance, term life insurance only insures the risk of death. This means that the sum insured is only paid out if the insured person dies. Families with children in particular often face financial chaos if one partner dies.

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Term life insurance is always urgently needed when the death of a parent or partner could leave a financial gap that could not be filled either by pensions or by the insured's own assets. The term can be agreed in such a way that the insurance ends when other pension claims take effect or/and the children are financially on their own two feet.

  • The sum insured to be agreed upon is determined on the basis of the individual income and asset situation.
  • Caution agents: Many insurance agents want to talk their customers into an endowment life insurance policy instead of a term life insurance policy, with which money is to be saved at the same time. The reason for this is that agents receive much higher commissions for these policies. However, there are more profitable options for securing retirement savings.
  • The insurers differ not so much in the services they offer, but rather in the amount of the premium. So compare prices!

Endowment life insurance

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An endowment life insurance always consists of two benefits. First, it provides financial protection for survivors if the insured dies. The agreed sum insured is then paid out. On the other hand, it is a savings plan. However, the customer does not find out how the premium is split.

Furthermore, only the guaranteed survival sum and the guaranteed surplus participation (for new contracts as of January 1, 2017, only 0.9 percent) are guaranteed. Surpluses above and beyond this are not guaranteed and depend on the business success of the insurance company. Here, customers can only "rely" on the insurers' forecasts. However, high returns are not to be expected in the near future.

  • Anyone who is not sure whether they can hold out for the term should not take out endowment life insurance. Because:
  • Cancelling beforehand means loss!
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  • Survivor protection can also be topped up with a considerably cheaper term life insurance policy.
  • Endowment life insurance can be taken out as part of a company pension plan, for example as a direct insurance. Then the insured person can look forward to Tax advantages.
  • If you decide to take out an endowment life insurance policy despite the disadvantages described above, you should pay the premiums annually. This saves surcharges. Supplementary accidental death insurance can be dispensed with. It is superfluous and too expensive.
  • When taking out an insurance policy, you should always choose a high-performing insurer. An overview of the market is provided by the insurance consulting service of the consumer advice center.

Unit-linked life insurance

Unit-linked life insurance is a combination of term life insurance and a fund savings plan. The money paid in is invested in investment funds, such as stock, bond or real estate funds. There is no minimum payout, as with endowment life insurance. The payout is what the fund has generated.

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