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Insurers are making money for their customers even during the pandemic

Against the background of instability in international capital markets and closure of another domestic second-tier bank, life insurers manage to earn stable and high income for their clients. Thus, in the first five months of this year, LICs have paid out 12.6 billion tenge to their clients. Azamat Yerdessov, the Freedom Finance Life executive, told LIFE INSURANCE what life insurance companies make money on.
Insurers are making money for their customers even during the pandemic

The main income for Freedom Finance clients comes from endowment life insurance. The product is becoming more and more popular, as over the past few years the rates in the deposit market have barely covered inflation. In just five months of this year, the LICs paid 1.6 billion tenge under endowment insurance contracts.

“Our company has many different programs, and each is tailored for specific goals, for instance, save up for school, protect savings from devaluation or increase the capital. These programs can be classified into two types: the first is the fixed-income products and participation in the company's profit, the second is products with a fixed rate of return but without participation in the profit,” explained Azamat Yerdessov, the Chairman of the Board of Freedom Finance Life.

The company offers clients three currencies in which they can receive income: tenge, dollars or euros. The maximum fixed return can be up to 6% in tenge, 4% - in dollars and 1.5% - in euros. It is worth noting that, in addition to a fixed profit, people receive insurance coverage against accidents.

At the end of 2020, the customers of Freedom Finance received additional pay-off from the total profit. “Keeping the average composite rating at the level of the sovereign debt of the Republic of Kazakhstan, our investors were able to fix the return taking into account the guaranteed rate of 9.1% in tenge, - the source said. - Returning to the distribution of funds when choosing investment instruments, we would like to note the high quality of assets, which the company invests free funds in. It helps mitigate the risks caused by high volatility during the crisis.”

What do insurers make money on?

Each life insurance company has its own investment strategies. Money the clients trust to the LIC is invested by insurers in various financial assets, for example, stocks, bonds or financial derivatives. Endowment life insurance is safe investment management with a money-back guarantee.

“Our company prefers fixed income instruments most of all. 95% of all assets are invested in fixed income instruments, and the remaining 5% are in stock and ETF (exchange-traded fund) instruments,” concluded Azamat Yerdessov.

Life insurers say that if a person wants to save up for something specific in a certain period and on top of that protect his money, he can use endowment life insurance. These programs are long-term (maximum insurance period is 20 years); and life insurance companies are reliable organizations.

Photos are from open sources.

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