All SESS programs have one important condition in common, a government subsidy. Ordinary families receive 5% annually, and large families or orphans, as well as disabled people get 7% on the accumulated amounts. It is worth noting that the maximum state premium is 100 MCI (more than 369 thousand tenge) per year.
Remuneration
However, Nomad Life went further and in addition to state payments offered the return on investment in foreign currency to its clients.
“In the Nomad Bolashaq program, premiums and payouts under the program are indexed with reference to the US dollar exchange rate on the date of payment. Investment return under the program reaches 4.1% in foreign currency. All premiums and payouts are made in tenge. The insurance company opens an escrow account in the bank, which the money will be transferred to, including the return on investment and state premium. The escrow account will be available only for the transaction to pay for education in favor of a foreign educational organization,” clarifies Nomad Life PR manager Mukhamed Bagdatuly.
They say in Nomad Life that currency diversification of savings is important not only during a crisis. Currencies of developing countries, such as tenge, are sensitive to external factors (changes in oil prices, geopolitical risks and other factors). During the volatility period, investors' appetite for stable currencies of developed economies increases in the currency markets. "If a person is pursuing the goal of accumulating funds with a long-term investment horizon, then the savings currency must be reliable and liquid. US dollar is one of the main reserve currencies in the world. And during crises, the result of the correctness of such a strategy is clearly visible," says the PR manager of Nomad Life.
Reserve currency is a generally recognized national currency in the world, which is accumulated by central banks of other countries in foreign exchange reserves. It serves as an investment asset and a way to determine currency parity, is used, if necessary, as a means of conducting currency interventions, as well as for international settlements. Sometimes this also means the currencies most used in international trade.
Nomad Life has been the first on the market to offer a savings product with a guaranteed interest rate in foreign currency, so the company has extensive experience in this area. Besides, payments to clients are based not on loans (this is what the banking business is built on) but on reasonable and thoughtful investments. “To secure foreign currency liabilities, investment-grade corporate and government securities of residents and non-residents of the Republic of Kazakhstan are purchased. The main principles of investing are that the size of assets in foreign currency is not less than liabilities in foreign currency, and the rate of return on assets covers the rate of return on liabilities. The current yield on the formed investment portfolio is 7.62%, which covers the rate on liabilities,” the interlocutor emphasizes.
Tax incentives
Life insurance is, firstly a financial planning tool, therefore most countries in the world support people in this endeavor through tax incentives. In Kazakhstan, when making insurance contributions, parents save (within 320 MCI - this is over 1.1 million tenge when calculating individual income tax by the employer). Besides, the payout under the SESS is not subject to taxation on personal income tax.
Reliability
The entire amount of savings and payments under the product are guaranteed in full by the Insurance Payments Guarantee Fund.
“In international practice, life insurance companies (along with pension funds) are the most stable financial institutions. This is explained by the stricter requirements that the regulator sets for them regarding the size of equity capital, adequacy of the solvency margin, liquidity, quality and diversification of assets,” clarifies Mukhamed Bagdatuly.
Nomad Bolashaq
SESS product
Tuition fees in Kazakhstan and abroad
Premiums and payouts under the program are indexed with reference to the US dollar exchange rate on the date of premium/payout.
The company guarantees return in foreign currency of up to 4.1% per annum + up to 7% of annual premium from the state.
Tax benefits
Possibility of changing the contract in favor of another child
Savings are protected by the Insurance Payments Guarantee Fund (IPGF).
The policy can be easily purchased on the company's website or at the nearest office. You can get advice by calling 3260 from a mobile phone. The call is free.
Photo courtesy of public sources
