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Life insurance policies vs. deposits: what to choose

Endowment has a great advantage over a bank deposit in creating the sum insured for which the client is covered for the entire period of insurance. Insurance programs are longer-term than deposits and are concluded for 5–10 years or more.
Life insurance policies vs. deposits: what to choose

“Let's look at an example: a person signed a contract for 15 years for 200 thousand tenge per year. Where does this amount come from? If a person earns around 2.5 million tenge per year, then 200 thousand tenge is less than 10% of earnings. Thus, this amount can be easily set aside. If divided, it comes out to 16,600 tenge per month or 550 tenge per day. You must admit, that every person, student, sometimes even a schoolchild, has 550 tenge a day, which he spends imperceptibly on all sorts of useless, unnecessary things. If our people being financially literate, set aside 200 thousand a year and concluded a contract for 15 years, they would form insurance coverage of approximately three million tenge. On top of this amount, the client is paid a guaranteed percentage of the company's investment return at the end of the contract,” says Svetlana Bayeva, a representative of the insurance market.

She calls this insurance cushion in the form of own savings the main advantage over a deposit. Such policies are concluded by people who are concerned about their families’ future and think about various unforeseen circumstances. Thus, if the insured person manages to make only one or several payments and a disaster happens to him, the company will pay his family not only what he has invested but the entire amount for which the policy has been calculated.

In order to accumulate money on a deposit and receive interest, the client has to be alive, healthy and able to work. In insurance company, a person knows that no matter what happens to him, this money will come to his family in any case: if everything is fine, he will accumulate and receive it. And, God forbid, if something happens to him, his family will get the amount he wanted to accumulate anyway. The average interest varies between ±1% to the bank interest. It is important to bear in mind that life insurance is not an investment project where you can expect a great return. The main thing here is to create insurance coverage for the client for the period of savings in order to financially protect his family in case of any physical health problems, the specialist explains.

As a bonus, companies transfer payments to their customers in case of various injuries. For example, a person received 600 thousand tenge from the insurance company for three broken ribs during the races, a dislocated ankle can be estimated at 50 thousand tenge, a broken arm - from 100 thousand tenge. These amounts are not deducted from the depositors’ savings and the interest accrued from the companies’ incomes.

Clients always have access to their own funds. The annual fee, if necessary, can be both increased or decreased, and a deferred payment can be taken. However, if the policy is designed for 15 years, then it is better not to touch the money for the first 3-4 years, because the termination of the contract in the first few years threatens that all the money invested will not be returned to you, explaining that the company counts on one amount to be accumulated to increase profitability, and in fact it is another amount, moreover, the risks of the organization are taken into account. In this, insurance, by the way, loses to a deposit, where you can withdraw your funds without time limits.

That being said, Kazakhstanis can keep their funds both in dollars and tenge. In this case, perhaps, insurance companies have an advantage over banks as the remuneration rate of the former can reach three percent, while on deposits it barely reaches 1%. And given that the tenge is shaking like an aspen leaf from any fluctuations in the world market, for many it seems more reasonable and safer to save in foreign currency. The only thing is that not all nine companies in the Kazakhstani market now provide such services.

The main customers of insurers now are mostly women aged 35-40+, who are more conscious and responsible in planning the future and providing the family with a financial cushion.

Source: https://liter.kz/dolgoigraiushchie-strakhovki-ili-bystrye-depozity-kakie-vklady-bolshe-popolniat-koshelki-kazakhstantsev-1651549964/

Photos are from open sources.

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