Economy & Politics

Life insurance with no security guarantee

Annuity and life insurance are a popular form of retirement provision. Photo: dpa / Sebastian Kahnert


In the case of new life and annuity insurance contracts, the market leader Allianz no longer wants to guarantee the receipt of the contributions from 2021. Riester contracts and products for company pension schemes are excluded.

Frankfurt – In the case of new pension and life insurance policies, the market leader Allianz will no longer guarantee that the contributions paid will be received. From 2021, customers would only be offered contracts with a guarantee level of 90, 80 or 60 percent, the insurance giant announced on Tuesday. Riester products and those contracts for company pension schemes for which a guarantee level of 100 percent is required by law are excluded. The group emphasized that the reduced guarantees improved the chances of “long-term attractive returns” for customers.

The reason for this is the low interest rates

A guarantee level of 100 percent means that at least the sum of the contributions paid is available at the end of the savings phase. For decades, this security promise applied to all life and pension insurances. However, it forced insurance companies to invest customer funds very conservatively. The low interest rates on government bonds and other safe forms of investment are making it increasingly difficult for insurers to increase customer deposits – that is, to generate surpluses beyond the receipt of the premiums paid. Their decline is making life insurance less attractive.

“In our opinion, contracts with 100 percent guarantees are no longer up to date,” said Alf Neumann, Chief Operating Officer of Allianz Lebensversicherung, to our newspaper. “A typical old-age provision contract runs for around 30 years. If, over this period of time, investments are made only in fixed-income investments that today yield a return close to or even below zero, there is simply no longer any profit. “

Contracts with lower guarantee levels have been on the market for around ten years – but until now, Allianz customers had the choice of whether or not to get involved. The products give providers the option of investing the money in riskier forms of investment such as stocks or corporate bonds.

Since higher returns are possible here, insurance companies with a lower level of guarantee can definitely yield more money than traditional products. However, there is no guarantee of this.




Broad diversification of customer funds should ensure security

Neumann explained: “We are still safe because we offer an extremely broad diversification of capital investments and a very broad focus. By diversifying customer funds, we continue to offer attractive, low-volatility returns. ”Furthermore, as a policyholder nears retirement, their savings would be shifted to more conservative investments. In this way, the customer is “no longer fully exposed to fluctuations in the capital market”.

For Axel Kleinlein from the Association of Insured Persons (BdV), the move away from the 100 percent guarantee means that life insurance is “worse than the pillow”. Niels Nauhauser from the Baden-Württemberg consumer advice center criticized: “The promise of the alliance is that foregoing security enables higher surpluses. However, it is uncertain whether the customer will actually get it, while the sales commission and costs will be invoiced to Allianz in any case. One possibility are fund savings plans.

There are also fees for buying and managing mutual funds. On the other hand, in the case of funds, “all shareholders are transparently involved in profits and losses. In the case of insurance, on the other hand, the provider’s business policy determines how risks and opportunities are distributed collectively and in relation to the insurer’s shareholders, ”said Nauhauser.

Consumer advocate calls for lower sales commissions

BdV board spokesman Kleinlein pointed out that the insurance companies in the past reduced the surpluses, among other things, in order to build up an additional interest reserve. This was introduced by the legislature in 2011 so that the insurance groups can continue to make the payments that were promised when lucrative old contracts were concluded, despite the low interest rates.

Kleinlein accuses the companies of building up this reserve pot only because they promised their customers too much in the 80s and 90s. “The insurance companies are now making their customers liable for their calculation errors.” Instead, the commissions and administrative costs should be reduced, demanded Kleinlein.

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