Demand for life insurance products is growing in Kazakhstan. Thus, the dynamics of LIC premiums in annual terms has been 75.4% for ten months of 2021. The total gross premiums collected in January-October reached 314.6 billion tenge. “The future belongs to insurance products. So far, the development of the market is hindered by a low insurance culture. In the West, LIC products are widespread and in demand. This will gradually happen in our country. People will come to understanding that LICs offer products at a reasonable price, people will begin to receive timely payments and, with the help of word of mouth, life insurers will receive better advertising,” said the FIAK executive.
Insurance as investment
The number of people in the United States who place money with LIC is almost twice as many as those who open deposits. Investment plans of insurers are very popular in this country. There is also equity life insurance or Unit-Linked in Kazakhstan, when a person buys a long-term life insurance policy, and this money is invested in various assets, most often through investment funds. The policyholder can independently choose assets, change the portfolio, choose the term of the policy and increase the size of the investment.
“Endowment insurance products are also very good in our country. There are policies that stipulate income, but there are products that share profit with a life insurance company. You receive life insurance and a portion of the insurance company's profits, that is, return on investment. These are products with a moderate investment risk,” noted the speaker.
The market economy system itself contains the mechanisms of crises and bankruptcies. They cleanse the market of broken business models and outdated systems. “LICs are regulated but regulation cannot prevent from all troubles. If, a LIC’s license is suddenly revoked (everything is possible in a market economy), Insurance Payment Guarantee Fund will undertake payments to clients and then transfer the assets to another insurer. A multilevel system allows protect people from risks,” explained Yelena Bakhmutova.
Insurance as a secure old age
Voluntary retirement insurance programs are successfully implemented worldwide allowing people provide themselves with a livelihood in old age. The size of future pensions does not depend on the capabilities of the state social security system but solely on the desire and capabilities of each person. Pensions in our country can be received from four sources, one of them is life insurance companies. “Insurance companies are part of the pension system. Retirement annuity is an absolutely normal financial instrument that gives life-long protection to people. Payments from the UAPF are inherited, but these payments are made until the person runs out of all the money. Annuity, on the other hand, obliges the insurer to pay you a pension of up to a hundred years or more. Annuity insurance is a good tool in old age,” said the FIAK executive.
Insurers offer various supplementary retirement plans, and it is the client's right to choose the one that he considers most beneficial. Contributions to voluntary retirement plans can be lump-sum or accumulative. “It is possible to buy retirement annuity in advance, deferred retirement annuity or joint retirement annuity for spouses. The retirement annuity market is rapidly developing and is an alternative to both the UAPF and real estate investments. If you think about secure old years, buying a retirement annuity is a very good deal. We will see new instruments that life insurance companies will be offering in the future,” the speaker concluded.
Let us remind that the total LIC premiums on annuity insurance in absolute terms amounted to 112.4 billion tenge, on retirement annuities - 106.4 billion tenge.
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