Prejudices scrutinized
The following prejudices are common to life insurance companies, but they are not all true. In general, life insurance is part of private provision and can be found in both the 3a and 3b pillars. Those who use the 3a pillar and have life insurance with a bank invest in pure savings. Both the policyholder and the relatives are protected if one of the insured risks should occur.
Prejudice 1: Protection only exists in the event of death
The protection of life insurance can even go well beyond pure death protection. Protection against disability is just as possible as a premium waiver in the event of illness. A distinction must be made between the various types of life insurance. Pure risk insurance only pays if the insured risk occurs. Mostly death and disability are insured here. Mixed life insurance, on the other hand, combines various risks and ranges from life insurance and disability to saving for old age. Even if the insured risk does not materialize, the policyholder benefits from the premiums.
Prejudice 2: Early termination will be expensive
It is true that early termination of life insurance can be expensive, which is especially true for mixed life insurance. An early termination can sometimes mean severe losses, but this depends on the previous duration of the insurance. Because: In the first few years after the conclusion of the contract, the initial commission is amortized. After that, building up your assets can begin. This means that a termination at the beginning of the insurance leads to the fact that the costs incurred with the conclusion of the contract have not even been paid. The surrender value of such insurance is zero. Only after 10 to 15 years can there be an increase due to the early termination.
Prejudice 3: Only suitable for families
The coverage of life insurance is not only important for families, single people also benefit from it. Life insurance is particularly cheap for young people who do not yet have a family of their own. You can top up or adjust the insurance at a later date without having to re-examine the admission of the spouse or children. Life insurance is also important for the self-employed, because they often do not have the really important 2nd pillar for provision. In order to protect your own disability, it makes sense to take precautionary measures through life insurance.
In general, if you want to compensate for gaps in provision in the first and second pillars, you should think about a mixed life insurance policy. And that regardless of whether you have your own family or not!
Prejudice 4: Intransparent and not very flexible
The insured would like to know how the premiums are used. Allegedly, however, it is not communicated how the bonuses will be dealt with. But this is not the case, because the insurance companies must show the use of the premiums. Costs are clearly shown, and full transparency must be guaranteed on request.
Furthermore, life insurance is often seen as not very flexible, but that is also not the case. In the meantime, they have long since adapted to the needs of customers and are flexible with regard to the amount of the premiums, the times of payment and various components of the insurance.
Bottom line: life insurances are better than their reputation
There are many prejudices against life insurance, but they are not quite as bad as their reputation is. They are much more transparent and flexible, and they also represent an important provision for the self-employed. They can be adapted to the respective risk and not only offer protection in the event of death. Only the prejudice regarding the low surrender value is tenable, at least in the first 10 to 15 years after the conclusion of the contract.
