- Galym Tashmukhanbetovich, our portal has repeatedly raised the topic of State Educational Saving system and the possibility of connecting life insurance companies to it. There is an expert opinion that “long-term cumulative life insurance programs, being a classic product of life insurance companies provide for the insurance payment on a date specified by the insurance contract occasioned with socially significant events of the insured or beneficiary: entering a university, etc." What do you think about this?
- The accumulation service to such a significant event, as, for example, admission to a university, looks more attractive as a product of LICs, and is an alternative to deposits. Since educational savings are long-term, they should, first of all, provide an opportunity to make money on savings. An important factor is also the guarantee of return of deposits. Today, the government offers the public educational savings with state premium. In cooperation with SES system the LICs will become not only a well-planned investment, but also the guarantor of ensuring a sustainable position in the future. The amendments in the legal framework are required.
- What is the potential of LICs in the development of the SES system in the country? What opportunities for companies and customers do you, as the head of State Annuity Company JSC, see here in perspective?
- LICs can become an alternative investment tool for potential depositors. As of 2013, SES system has only one sales channel – the commercial banks, perhaps this was due to the low demand among the population. Having the opportunity of becoming a member of SES system the LICs will bring competition into the market and offer a more effective approach with regard to insurance coverage, that is, a product different from banks.
People will have a choice: it will be possible to invest money not only in second-tier bank deposits but insurance companies as well. If a misfortune happens, the insurance benefit is paid. JSC LIC State Annuity Company will be the security agent and provide reimbursement for lost earnings to children up to the age of majority, students - up to graduation from the age of 18 to 23 years, and so on.
- What can LICs and state bodies do for inclusion of life insurance companies in the SES?
- The companies participating in the insurance market can make joint efforts in promoting the idea of including them in SES system, as well as further work providing information to potential consumers. At the current stage, it is important to offer a reliable and attractive product beneficial for the population by getting the government support.
- What benefits will the state get by attracting LICs in SES system? Are there advantages for people?
- The benefit of attracting LICs for the government is in a greater choice of financial institutions, as a consequence, more investment methods for citizens. A larger number of program participants will allow covering a large segment of consumers and promoting the idea of educational savings in Kazakhstan. Depositors will get the opportunity to receive insurance protection for the saving period. As a father who worries about the future and education of his children, I am a user of SES system. In general, the promotion of this program is important for accessibility of higher education in the country.
- What benefits do LICs get when they are included in SES system? Why is it important for the country's economy?
- The benefit is obvious - with the inclusion of LICs in SES system the educational savings will become more attractive to depositors. The high stability and solvency of LICs on long-term deposits with an annual state premium will make the product an important investment tool for achieving a positive social effect. It will also increase the level of financial literacy of the population.
- Have your company negotiated this topic with government agencies? Do you think the time for changes in this market has come?
- Yes, we are considering this area at our own level, as well as a number of other projects in order to provide the population with more lucrative, convenient and necessary products. I believe that the time has come; the insurance market should develop and not stand still.
Photo is a courtesy of the press service of the company.