Firstly, capital security: there are no specific problems here. The invested funds under both the deposit and ILI are protected by law. The policyholder will receive the full amount. However, if the return of the deposit is guaranteed by the deposit insurance system, then the holder of the ILI agreement faces the risk of bankruptcy of the insurance company. The licenses of life insurers have not been revoked in recent years; most companies are subsidiaries of universal insurers or banks and meet the necessary requirements. It is worth paying attention to the credit rating of the owners. The reporting of all companies is available on the websites, but detailed analysis can only be made by professionals. Besides, everything can change by the time the contract ends, so such a risk cannot be excluded, and in this case, the likelihood that the assets will not be enough to pay off the obligations is quite high.
Secondly, the security of return: the interest on a deposit and its payment even in the event of bank bankruptcy are guaranteed. There are no guarantees either on the return or its size under the ILI agreement. When concluding an agreement, the client chooses a strategy, but even professionals cannot accurately predict how the investment object will behave. Therefore, both ups and downs are possible. Even if the strategy has worked successfully in one period, the opposite situation is possible when the contract is extended. In any case, it is worth understanding that the higher the profitability, the higher the risk. Thus, the risk of not getting a return remains one of the highest.
Thirdly, the possibility of termination and refund: there is a peculiarity here that is often kept silent when concluding a contract. ILI contracts are long-term, and upon termination at the initiative of the policyholder, part of the amount is withheld from them. In this case, the reason for termination is not taken into account. That is, if the policyholder needs to get their money back, the redemption amount will be less than the investment sum, even if there is very little time left before the end of the contract. To reduce this risk, the contract can be split into several parts if the conditions for the minimum amount are met.
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