Voluntary life insurance is a conscious choice of people who are worried about the financial security of their family members.
What types of policies are on the Kazakhstani market?
There are two main types: accident insurance and life insurance.
Accident insurance covers all risks associated with the occurrence of an accident. Depending on insurant needs the risk of death, injury (payments according to the table of injuries as a percentage of the insurance amount depending on the injury severity), temporary disability and hospitalization as a result of an accident can be covered (payments are made in the form of daily compensation as a percentage of the sum insured).
In Life insurance in addition to the risks associated with the occurrence of an accident, the disease risks are covered, i.e. this policy provides insurance protection in the event of an accident and disease detection, and depending on the insured’s needs, the risks of death, survival or critical illness may be covered.
“Life insurance policies can be of an endowment insurance nature, which point is to save a certain amount of money by a certain date and receive insurance payments in connection with surviving to this period, including the possibility of providing various insurance covers against accident, illness and etc.,” explains Assel Chagirova, the Underwriting Department Director at JSC LIС Nomad Life.
There is also a non-accumulative insurance, the point of which is classical life insurance with a different set of insurance coverage, but without the accumulation function, the interviewee adds.
What affects the policy cost?
The policy cost depends on the selected insurance amount (the maximum policy payment chosen by the policyholder), insurance term and selected insurance coverage. In case with life insurance the age and gender of the insured are also considered. And for any type of insurance, the risks like diseases, overweight, dangerous hobby or profession a particular insured person has must be taken into account, so it is impossible to generally estimate the policy cost. Besides, every insurance company may have its own insurance experience, statistics, an approach to using mortality tables, expenses for concluding a policy and providing insurance, which will also affect the policy cost.
The cost of the policy depends on the age of a LIC client. “If the client is healthy or the deviations in health condition do not affect the life expectancy or the occurrence of other insured events, the policy cost will be standard as for a healthy person free of any risks,” says Assel Chagirova.
The speaker emphasizes that bad habits affect the policy cost: “Everything depends on the quantity, frequency and duration of use. For example, if you drink a few glasses of wine with your friends on weekend and even smoke two or three cigarettes daily and do not have any diseases, then your policy will be rated as standard. If, on the basis of your answers, the Company decides that you are abusing something, then you will have to pay an increased risk premium, or the Company may refuse to give insurance.”
Besides, when concluding a contract with a client, life insurance companies take into account the inheritance of the next of kin and hobbies that may affect the insurance event occurrence.
“When underwriting a policy, the assessment of the client’s type of activity is necessarily carried out, and if this profession involves an increased risk of injury or death, this will certainly be taken into account. If during the insurance term the client changes his occupation to one that does not bear the risks to his health and life, the Company, on the basis of his application, will recalculate the policy cost, which will lead to a reduction in the client’s insurance expenses,” the speaker concludes.
A person proves his care of family members by insuring life, so it is especially important to make sure that, if necessary, the family will receive financial support.