Life insurance

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This article or paragraph places onlythe situation in Germany . Help to describe the situation in other countries.

A life insurance is an individual insurance (in contrast to the social security)), with the contribution and achievement after the equivalence principle (contribution corresponds to achievement) to be determined. Within the individual insurance them are persons an insurance. The achievement (insured sum) becomes due with death, experiencing the expiration or with entrance of serious diseases (“sum insurance”, contrary to the “indemnity insurance”, with which an objective insured value is determinable: Furniture, disease costs).

The life insurance becomes in its insurance-technical core (so-called. Net premium) on basis of biometric risks (e.g. Number of deaths,Longevity, serious illness) calculates, the separating order in such a way specified. The most well-known separating order is the dying board of the German registrar combination, thus the statistical experts.

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history first life insurances in antique Rome, where “funeral it unites “the funeral costs of their members took over as well as the survivors used financially supported. Modern life insurances became in the late17. Century in the life called, but originally as commercial insurance. Buyers, shipowners and Underwriter so mentioned met in Lloyd's Coffee House, the forerunner of the today's well-known insurance Lloyd's OF London.

In the United States the first insurance developed 1732 in Charleston, South Carolina; however it offered only to remunerations with fire. The sales of life insurances began into the late 1760er years. The Presbyterianer - Synoden in Philadelphia and New York the corporation for relief OF Poor and Distressed Widows and Children OF Presbyterian of Minister (combination toSupport of the poor and and distressed widows and children of presbyterianischer priests) were created 1759; Priests of the episkopalischen church organized a similar fund in the year 1769.

Before the American civil war many societies of the USA insured the lives of the slaves - beneficiaries from possible remunerations were howeverthe slave owners. Laws forced 2001 and 2003 the insurance to it, their archives after life insurance policies at that time to through forests.

As “more modern” origin are considered the burial funds 19. Century, which would use statistical principles for the first time. In Germany starting from 1827 life insurances by the Gothaer life insurance bank were sold. 2004existed in Germany 95 million contracts with an investment of 618 billion euro.

right frameworks

life insurances can only in the legal form of the German corporation (AG), the cooperative insurance company on mutuality (a.G., a character of the cooperative) or as address of a European insurer in the German inland operatedbecome. The national permission and supervision take place via the Federal Institution for financial services (Bafin). The supervision and the guidance of a life insurer are essentially in the law of supervision of insurance regulated (VAG). A life insurance contract comes off between the life insurer (VR) and the insurant (VN) as follows: the insurance proposal of the applicanta notification of acceptance of the insurer follows, i.d.R. by the agreeing contentwise insurance policy (colloquial “policy”). Only starting from this document the “applicant” becomes the “insurant” (VN). A reason for this linguistic difference is temporally the risk examination lying between request and insurance policy by the VR.

Consumer protection: Actual is howeverto regard coming off (fundamental all kinds of the private insurance) contract under aspects of consumer protection. Thus in the preface of the VVG occasionally the insurance proposal than “request of the applicant of the insurance company was regarded for the delivery of an offer”. As this “offer” regularly the insurance policy (“policy”) is meant, that the VNby silence and numbers assumes or by contradiction within 2 weeks rejects. Further basic condition participates that the VN has all conditions of insurance and consumer information. Missing documents restrain the contradiction period.


Beginning of insurance:

Three special “beginning” must be given all, so that the insurance protection exists:

  • 1. More technicallyBeginning: so-called. “Beginning of the prämienbelasteteten period”,
  • 2. Formal beginning: Acceptance by the insurer (i.d.R. Date of the insurance policy),
  • 3. Material beginning: Day of the payment of dues (entrance of the redemption premium - Erstprämie - with the VR, insurance premiums are so-called. “Sending debts”, i.e. the payment of dues takes place at “expense and risks” of the VN).

The VR has in-complainable right to contributions and in-complainable obligation to grant insurance protection. The VN has the reverse rights and obligations. Besides the VN does not have in-complainable Nebenpflichten (“Obliegenheiten”) by the VR. An injury of its Obliegenheiten cannot in-complain the VR; itlead however with causal (causal) connection with the occurring of the accident to the failure of the achievement. Example: VN concealed a briefly which is past heavy illness in the request form. In this case the VR can withdraw from the contract (burden of proof with the VN), later than 3 years after beginning of contract can the VR only because of bad-cunning deception contest (burden of proof with the VR).

The right of the insurance contract is regulated in the insurance contract law (VVG), its amending to 01.07.2007 lines up.

Beside the VN as contracting parties three further persons functions on customer side play a role in the insurance contract with a life insurer:

  • 1. Contribution payer: = contribution paying person (contribution debtor remains probably the VN)
  • 2. insured person: = yardstick of the premium computation, must agree the conclusion of the insurance contract however (§ 159 VVG)
  • 3. Beneficiary: = persons entitled for the receipt of the insurance benefit (when death/experiencing, distinguishable)

as characteristic of the life insurance contractthe subscription right is to regard, which regulates, which person (EN) death and experiencing drop achievements from the insurance contract received.

tariffs and calculation

the detailed arrangement of a life insurance one calls tariff. The tariff describes thereby all insurance-technical corner points of the life insurance product. In addition for example the maximum belongsOlder with beginning of insurance, the maximum insured sum, the combinability with additional insurances, regulations over medical examinations during filing of an application, and above all the contribution and the power spectrum (D. h. the data, who when with the occurrence of which events, z. B. with the death of a person or when their experiencing howmuch to pay must), and the bases of calculation in such a way specified.

By the bases of calculation one understands the tariff to reason which is appropriate the dying board (z. B. DAV 1994 T or DAV 2004 R - at present current boards of the German registrar combination [1]), the calculation interest and the costs. ThoseBases of calculation are unchangeable after conclusion of a contract in the principle. This does not apply compellingly to later contract increases (z. B. by dynamics).

The calculation interest is the interest rate, with which all contract values of a life insurance are calculated. Generally it is particularly well-known, because it with capital life insurances also the warranty interest chargesfor the savings portions indicates. In Germany by the Federal Ministry for finances in the covering resetting regulation a maximum calculation interest is specified. It applies only to those contracts, those after the entry into force of the regulation and/or. after the date specified therein to be again locked. The height orients itself at the ten-year averagethe rotating net yield of ten-year Federal loans with a remaining time of 9-10 years. The maximum calculation interest for conclusions since that 1. January 2004 amounts to 2.75%. It becomes starting from that 1. January 2007 on 2,25% lowered. The calculation interest agreed upon with conclusion of a contract keeps with a change of the maximum calculation interestfurther its validity. The term maximum calculation interest therefore agitates that the insurance companies may usually use no higher interest with the computation of the covering resetting. If they promise the customer a higher interest, then they have for the additional interest promises necessary means from company funds (own capital funds)To supply conclusion of a contract.

Also offering contracts with lower warranty interest than the maximum calculation interest is quite possible, e.g. with “capitalization business” (in accordance with VAG) for the covering of requirements for life work time account over the employer.

Frequently in the press which can be found the equalization maximum calculation interest with “the interest, with that insurance companies the assetstheir customers to at least pay interest on must ", is wrong.

The costs of a life insurance. One differentiates between

  • administratives expense - costs of the current administration of the contract, which are proportionately contained likewise in each contribution, in per cent of the contribution and/or as sum (unit cost prices), in particular
  • the Inkassokosten - costs of theContribution collection, those proportionately each contribution to be loaded
  • rate impacts - (LV-contributions are annuities) costs of opposite yearly payers increased administration expense and for the covering of losses of interest with under-year old, e.g. monthly counting method; usually the impacts amount to with monthly payers 2.5% to 5.
  • Conclusion and contract installation costs - costs,in connection with the conclusion and the mechanism of the life insurance contract result (z. B.Commission, contract documentation, risk examination, if necessary. medical examination). Commissions are supervision-legally covered with 40%o (40 of thousands) on the contribution sum.

The conclusion costs become usually in its entirety the first contributionsinferred (Zillmerung), although they cause an increase of the contribution with the computation of the premiums over the entire payment of dues duration. With tariffs with savings portion this leads to the fact that in the first contract years with a notice no money arrives at the disbursement. Tariffs, with those the conclusion costsconstantly the premiums to be taken, ungezillmerte tariffs are called.

Besides the risk premiums are inferred from the contribution for the covering of the insured risk.

  • The part of the contribution remaining after departure of all costs and the risk premium is the savings premium and serves - together with the calculation-moderate interest on thatpast assets - for the setting up the covering resetting.
  • Apart from the cost categories mentioned still fees can be fixed for certain business transactions in general conditions of insurance. It acts predominantly around rare and/or in the administration very aufwändige business transactions (z. B. Deferment of payment, policy loan). ThoseFees are indicated either as absolute amount or as percentage of a size relevant for the procedure.

kinds of the life insurance

life insurances like it in Germany to be offered, can be divided in four large groups:

  • Temporary life insurance
  • capital screen end life insurance
  • fund-bound life insurance
  • old age pension insurance

(private) the old age pension insuranceis to be counted also for life insurance, since it is calculated insurance-technically similar and operated. The large difference consists however of the fact that during a life insurance on the death the risk of premature death is insured and during an old age pension insurance the longevity risk in such a way specified.

Besides numerous additional insurances becomeoffered. The most important is thereby the inability to work additional insurance (see also for this inability to work insurance). Further auxiliary components are the accidental death additional insurance, with which a repeated of the simple death achievement is insured, and nursing care insurance achievements.

temporary life insurance

the temporary life insurance deposits the insured death sum (insured sum) with death of the insured personthe beneficiaries. Sample applications are:

  • Security of economically dependent member
  • safety device of commitments
  • carrier tariff for one or more additional insurances (z. B. Inability to work additional insurance)

the temporary life insurance gives it in different developments. Most frequently the temporary life insurance is to be found also equal lasting insured sum and the temporary life insurance with falling insured sum.

The temporary life insurance with falling insured sum is usually used for safety device by loans with continuous repayment. The insured sum takes thereby in the run the time in same measure off (annuity), as the loan is erased. It becomes in this connection of banks also in connectionwith loan and credit agreements as Restschuldversicherung so mentioned offered. Frequently actual for the security of the credit giver - the conclusion of such Restschuldversicherung a condition of the granting of credit.

Besides there is the temporary life insurance as a special case still on connected lives. With this form of the temporary life insurance there are several insuredPersons. The insured death achievement becomes only once due with the death of an insured person during the period of insurance. The temporary life insurance on connected lives serves the mutual security economically from each other of dependent persons (z. B. Business partner, (before) pairs without children).

The contribution (insurance premium) of the temporary life insurance depends onOlder, of the sex and of the state of health of the insured person to the beginning of insurance, as well as of the insured sum and the running time (period of insurance) of the insurance. Sometimes also addition for the practice of certain occupations or leisure activities are required.

Also during a temporary life insurance the life insurer gains surplus to favour of the particularInsurance contract. Contrary to capital life or for old age pension insurance however interest surplus from investments plays thereby an insignificant role. Rather it concerns risk surplus and cost surplus. These result from the fact that the life insurer must furnish fewer death achievements and spend smaller costs than calculated. That receives these surplusInsurant either as death bonuses or as accounting of contribution. With the death bonus the insured sum is increased by the obtained surplus. , They do not remain to footstep the accident with the life insurer. Regarding the accounting of contribution the surplus is charged immediately with the calculated insurance premium, so that a reduced number contribution results.The calculated contribution becomes in this connection as gross or tariff contribution, which reduced contribution by surplus as net contribution designation. Footstep the accident during the period of insurance, no further achievements do not become due.

In principle there is also the possibility of accumulating the obtained surplus interest-bearing andto disburse with the death achievement or with the expiration of the period of insurance. This variant is today still offered hardly and is predominantly still with temporary life insurances to be found, which were locked until approximately 1980.

Although temporary life insurances do not have a savings portion, it can with a premature notice of the insurance contract to a capital disbursementcome. This is because of it that the life insurer forms a covering resetting for the covering of the risk from the risk portion of the insurance premium, from which dependent on the Tarifgestaltung a repurchase value result can. In principle it concerns with this assets premium pre-payments. At higher age one becomeshigher annual risk premium needs. The insurance premium is however constant and to a certain extent over the running time a means over the low at the beginning of and the high final premium.

capital screen end life insurance

the capital screen end life insurance combines death security and savings plant. It pays with death of the insured personthe insured death sum to the beneficiaries for the death. If the insured person experiences the expiration of the period of insurance, the experiencing drop achievement is disbursed to the beneficiary for the case of experiencing (usually the insurant). The subscription right can be specified by the insurant separately for the experiencing and death.

ThosePrincipal screen end life insurance is one particularly in Germany - among other things also because of the tax treatment of the yields favorable in the past - wide-spread form of the investment of funds, although the linkage of insurance and savings procedure of Verbraucherschützern is criticized. With beginnings of contract starting from that 1.January 2005 disbursements of life insurances are however no longer taxfree. Old age pension insurances are further for taxation favoured, as far as the disbursement takes place in form lifelong pensions. (Frequently the possibility exists of being able to be disbursed the saved capital in an amount the capital compensation in such a way specified.) above all thoseRiester pension and Rürup pension are promoted for taxation, then however no capital right to vote exists. See also precaution expenditures, extra charge departure, age precaution extra pay. Into as far the saved taxes exceed a net yield with other plant forms is however questionable.

In Austria the capital becomes screen end life insurance (like also the fund-boundLife insurance) as off and experiencing insurance designates.

The capital screen end life insurance has several typical applications:

  • Investment, savings product.
  • Survivor precaution, in addition, for covering that inheritance-expensively, so-called. “false” (inheritance expensive insurance).
  • Combination product for family security and to the structure of capital (usually with the goal age precaution)
  • loan safety device, in particular in connection withReal estate financings
  • Rückdeckung of pension promises in the operational age precaution (back covering insurance)
  • investment for a certain purpose, also then to be reached is if the investor the end of the savings procedure not deeply felt (z. B. the training insurance and the endowment insurance).

One wants the capital screen endLife insurance into different developments and groups partition, then is to be separated sharply between sales designations and tariffs. Tariff-technically belongs for example the inheritance expensive, the fortune follow-up and the death benefit insurance to the same wage group and do not differ with many life insurers technically usually. Before this background arises the following tariff-technicalPartitioning:

  • Insurance on death and case of experiencing, also as mixed life insurance admits (classical capital screen end life insurance)
    both the death and the case of experiencing represent an accident and lead to achievements. With these tariffs usually that can also without the conclusion of an appropriate additional insuranceDeath protection to be increased.
  • Capital insurance with lifelong death protection (z. B. Death benefit insurance)
    the payment of dues duration of this life insurance ends frequently with a certain age (z. B. 80 years). Afterwards the life insurance remains existing noncontributory to the insured person dies. Some tariffs offer the possibility, at the end of the payment of dues duration oneTo call up experiencing drop achievement, so that the life insurance is terminated or with a reduced insured sum existing remains.
  • Principal screen end insurance on two connected lives
    with this variant gives it to two insured persons. The insured sum becomes only once with the death of the insured person dying first during the period of insurance,at the latest however with the agreed upon operational sequence due.
  • Term fixed insurance (z. B. Training insurance)
    during the term fixed insurance becomes the insurance benefit a pre-determined date (end of the period of insurance) due - independently of whether the insured person experiences this date. Footstep the accident, is void only the payment of dues obligation, the insurance benefitbecomes only for execution due.
  • Option tariffs
    this column is a storage tank for all organization variants, which cannot be arranged in the partitioning specified above. Z are possible. B. reduced death achievements, adjustment options at run time or different expiration operational sequence.

thing in common

apart from the investment andthe surplus systems is it in particular the calculatory philosophy, which is common all capital forming life insurances: Contribution less costs and risk portions over the running time (during the capital insurance with lifelong death protection the payment of dues duration) paid interest of the calculation interest result in the insured sum. The part of the expiration achievement, that the insured sumexceeds, corresponds thus to the surplus participation of the capital life insurance.

With a premature notice the insurant obtains the repurchase value in such a way specified. This corresponds frequently neither to the actual contract value to the last date for giving notice (existing covering capital to the last date for giving notice zzgl. surplus), still the sum of the contributions deposited already assigned so far. A positiveInterest charges of the deposited capital take place usually only after several years running time. Further it is to be noted that before the structure of the covering capital the savings premiums are used for the financing of the conclusion costs. The cancellation anticipated payments become among other things also in the fact it justifies that the life insurer for these cases plants of higher liquidityand according to smaller net yield to reproach and therefore the period transformation desired must realize ideal-typically cannot. In practice these achievements are usually served from current payment stream, since this capital is not available however then for new installations, are the damage calculatory neverthelessdeveloped. A further reason lies in the arising anti-selection, since the danger exists that above all bad risks remain in the existence.

investment

of the life insurers must separate very exactly its company capital from the contract capital of his customers. The contract capital rules in addition balance-technically in the so mentioned Liabilities fund, into which the contributions are paid after departure of the costs. The investments of the liabilities fund are strictly reglementiert by the law over the supervision of the insurance companies (law of supervision of insurance - VAG). The adherence to these regulations is supervised by the Federal Institution for supervision of financial service (BaFin).

The life insurer hasfor the investment to respect and the “liabilities fund ability” those must examine the plant principles (dispersion, mixture, security, net yield and liquidity), after plant classes and - ratios with each Investment. So in principle any more than 35% of the liabilities fund may not be invested in shares.

Beyond that becomesfrom the relation of own resources of the life insurer to the capital of the liabilities fund weighted after investment risk determines the Solvabilitätsquote in such a way specified. Since this must move in a certain span, only a financially strong life insurer can invest even into riskier plant forms.

See also: Investment restrictions

Surplus

apart from the risk and cost surplus already described during the temporary life insurance - which have for the yield of a capital life insurance a subordinated meaning - there is the interest surplus in such a way specified during the capital life insurance. It concerns capital returns of the life insurer, those over the calculation interestgo out. This must credit the life insurer to at least 90% to the individual contracts. These 90% refer however to the book value principle in such a way specified. Has for example an insurance company, a real estate, which (after writing-off) stands still with€ 10,00 in the books, in the liabilities fund D. h.the real estate belongs to the fortune of the insurants), then at least 90% of the profits gained from this real estate are entitled to the insurants. The true value of the real estates lies naturally around much more highly, the value of the real estate in this case is the current market value. The difference betweenthe market value and the book value “quiet reserve” one calls. Only during sale of the real estate the insurants of the then still existing contracts get their portion of the profit developing then. At present a violent discussion prevails over it, like the insurants time near at the quiet reservesthe life insurer to be taken part are. It is however frequently forgotten that many insurers dissolved quiet reserves some years ago, in order to cover quiet loads (Kursverluste with securities).

Insurance-technically there are numerous models for the conversion of the default of this minimum profit-sharing. They do not only differ after it,when the surplus is assigned to the individual contract (conclusion surplus portions are assigned in such a way to a considerable degree only with expiration and remain with a premature notice of large part at the insuring community), but also like them is then concretely used. The most frequent forms are the plant as interest-bearingAccumulation (savings balances), when noncontributory collateral insurance of the same form as that at the basis lying contract or as experiencing drop bonus so mentioned, which becomes due only when experiencing the agreed upon expiration operational sequence it gives also tariffs, with which the interest surplus in unit trust fund selected by the insurant is put on.


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Fund-bound life insurance

the fund-bound life insurance (FLV) moves insurance-technically within the same framework as the capital life insurance. The substantial difference consists of the fact that the liabilities fund (the savings portions contained in the contributions) is invested in unit trust fund. In the context of the unit trust fund connected with the tariff the insurant can select usually one or more unit trust fund, whereby it can usually change the selection during the period of insurance (so-called. SHIFT and SWITCH), i.e. Fortune change and far saving into other funds. The fortune of the VN always divides the fate of the invested funds (profit/loss). FLV is multiplealternatively with warranty elements similarly the KLV to arrange (e.g. Contribution warranties, profit and loss covering).

The insured sum essentially results from the sum of the contributions (contribution sum), which can be paid.

Risk and cost surplus are invested predominantly also into fund portions, whereby also different models (e.g. interest-bearing accumulation)are offered. If covering capitals or surplus are saved differently (funds “classically”), specialists speak of hybrid models.

A problem of the fund-bound life insurance is the Ablauftiming, if the courses stand with expiration of the contract deeply. The life insurers for this the following solutions on: The extension, the transmission option and the expiration management.

With the extension option waitsthe VN on higher Kursstände, can call however partially achievements up. With the transmission option the insurant the fund portions can leave itself transferred to its own depot, in order to then wait for likewise a more favorable time for the sales of the portions.

At the expiration management becomes in the last yearsthe period of insurance the fixed assets into lower-risk unit trust fund (usually pension or Geldmarktfonds) shifted. This is done either automatically via the life insurer or the life insurers submits to the insurant appropriate suggestions, those then to assume can or also not.

completion of the contract

a life insurance contract ends throughDeath of the insured person, expiration, thus reaching the final age (e.g. 65) or by notice, whereby the VR can in principle only because of contribution arrears well-informed (§ 39 VVG: Subsequent premium). An existing repurchase value is not disbursed, but as single premium (§ 175 VVG) for the education of a noncontributory insured sumused. Under maintenance of the entrance and of the final age of the contract the repurchase value is used fictitiously as a mark contribution for this period. Depending upon remaining time the noncontributory insured sum is relatively substantially lower than the original insured sum. Contained additional insurances are void i.d.R.

It is remarkable that itself a noncontributory positionstatistical and materially at the time its execution of a notice does not differentiate, since in both cases first the cancellation departure takes place!

With a notice the repurchase value is disbursed. This is calculated by the difference of covering capital (the sum of the accumulated savings portions over the running time of the depositedContributions) minus cancellation departure. + if existing surplus portions the insured sum exceed covering capital, one talks about the “call”. In this case the total assets without cancellation departure are disbursed.

Furthermore a characteristic applies on dissolution of the contract in the last year of the insurance contract: here the VN is placed in such a way, as if he hasalready paid and the last insurance year ran off all remaining contributions already. Only pending contributions and a Vorfälligkeitszins (“discount”) are then taken off from the achievement from the VN; the procedure calls itself “discounting”.

In addition insists the possibility, the contract on the secondary market for life insurances (“using policies”)to sell. Such a sale leads for the buyer to the tax liability of the yields from the contract. The Vorteilhaftigkeit of this solution results for the buyer from the being omitted cancellation departure and the upright received requirement on conclusion surplus.

see also

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