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No more full life insurance guarantees

I.n life insurance, an era is slowly coming to an end. The German market leader Allianz is saying goodbye to policies with a one hundred percent guarantee of the premiums paid. Allianz Germany announced this on Tuesday. Their intention is to be able to offer future customers attractive interest rates even in the zero interest rate phase. Customers can decide whether they want to be guaranteed 30, 60 or 90 percent of the contributions at the end of the savings phase.

For a long time, German insurers had been reluctant to drop the interest rate guarantee because they considered it to be the unique selling point of their sector in old-age provision. Others disagreed and named collective saving with profit sharing as a specialty of the insurance industry. However, the longer the phase of low interest rates lasted, the clearer it became apparent that the returns for customers would also fall significantly.

With the interest rate guarantees, however, life insurers have deprived themselves of the opportunity to invest in higher-yielding securities that do not involve a fixed interest rate commitment. Allianz wants to make this possible with the new model. “We want old-age provision to stay as it is: with attractive potential returns, real added value for our customers over a period of 30 or 40 years, while being reliable and secure,” said Andreas Wimmer, CEO of Allianz Leben, in a statement .

In fact, Allianz was one of the companies that reacted early on to low interest rates and the Solvency II regulatory framework and said goodbye to traditional policies with fixed interest rates until the end of the retirement phase. The “Perspective” concept introduced in this context will continue to operate with a guarantee of at least 90 percent even after January 1st. The Allianz Pension Fund will no longer accept any new contracts from 2022.

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