As it is well known, the US dollar is used as an international reserve currency, and many citizens consider it to be a long-term and reliable tool for the formation and preservation of savings. According to the statistics of the National Bank of the Republic of Kazakhstan, by the end of 2017, Kazakhstan residents kept more than 4.4 trillion tenge on foreign currency deposits in STB, mostly in US dollars.
Interest rates offered by banks on reopened or prolonged foreign currency deposits fell to 1% per annum, and, looking at the real offers of STB at the moment, it can be noted that most banks offer a rate of 0.5% for dollar deposits on the market. With these trends, the introduction of a new life insurance product "Zoloto Nomadov" by the Life Insurance Company NOMAD LIFE on the market for financial instruments was very well-timed. The product is positioned as a conservative and guaranteed instrument for people who have expressed their desire to store and increase their savings in foreign currency in the long run. We talked about new investment opportunities with the regional director of NOMAD LIFE in Astana, Roza Makhanova.
- Roza, could you tell us about the "Zoloto Nomadov" program?
- The mechanism of "Zoloto Nomadov” program is very similar to the way bank deposits work: the client concludes the contract, pays the insurance premium, and NOMAD LIFE assumes obligations under the terms of the contract to return the money along with the accrued investment income. The amount due is indexed to the rate of tenge to the US dollar at the exchange rate of the National Bank on the transaction date, thus, this product is suitable for all people who want to keep and increase their savings in foreign currency in the long run. "Zoloto Nomadov" has an obvious advantage over the bank deposit on a number of parameters. First of all the guaranteed interest rate accrued to the client reaches 3.26%. This figure provides for conversion of our liabilities in terms of the exchange rate of tenge to US dollar. Secondly, the the insurance policy term can be from three to ten years, that is, the client can fix the guaranteed interest on a long-term basis. Thirdly, there is an insurance cover. During the whole period of policy the risk of financial problems of the client's family that may arise if he passes away is minimized by the obligations of NOMAD LIFE to pay the client's heirs, chosen at the time of the contract conclusion, the entire amount of future savings (including investment income) when an insurance event occurs.
I would like to give an example. The program of accumulative life insurance "Zoloto Nomadov" with the insurance premium of 50 000 dollars is opened. The contract term is 10 years. By the end of these ten years, we will pay $68,805. The amount of 18,805 US dollars is the client’s guarantee income. If money was in the bank all the time and worked at 1% interest, the customer's reward for 10 years would be only 5,231 dollars. The bank deposits with the term of more than 3 years are rarely found. In addition, we have the insurance coverage valid within all these ten years! If our client passed away, $68,805 would be paid as an insurance compensation.
- Are there any additional options?
- I propose to restate the question. There are terms typical only for universal life insurance. In accordance with civil law, paid premiums are not included in the list of recovered property, they cannot be claimed by the third parties in case of property dispute, beneficiaries and terms of insurance payments are appointed only by the client, and are not subject to division between spouses in the divorce proceedings. Also, according to insurance legislation, each client has the opportunity to receive tenge loans in Nomad LIFE at a low interest rate charged upon policy, but the contract will continue to operate and savings will also be made in US dollars.
- As for the clients, who are they, the owners of the accumulation insurance policies under the "Zoloto Nomadov" program?
- I can distinguish two main categories of customers. One part of the clients is interested in "Zoloto Nomadov" as an alternative to foreign currency bank deposits. They are interested in the rate of return guaranteed for a long term, the conservatism of business strategy of the life insurance company in comparison with banks or management companies. Another part of the customers makes a decision to buy the policy, guided by their long-term financial plans. The insurance coverage to be paid, will be sent to pay for college tuition of children, grown up by that time, to provide our client in retirement age, to finance major purchases ...
- Are the terms of the “Zoloto Nomadov" program really more interesting compared to the second-tier banks’ proposal? And what if we compare them with the stock market investments?
- It takes high qualification and relevant competence for effective investing in the stock market. It is possible to hire a specialized management company, but in this case the client is expected to pay high commission fees for litigation. And even this contract cannot guarantee the return on investment. In case of unfavorable result of investment profitability can be negative. The management companies do not take responsibility on guaranteed profitability; they only declare the forecast indexes. Also, when using such tools, the issues of property recovery or the third parties’ claims of to the invested funds are not closed.
Management companies often invest their clients' money abroad, so declaring their investments by clients is also important. Kazakhstan has ratified the Strasbourg Convention, which provides for the exchange of data on property and money abroad. If the partner company withdraws money outside the country, and this operation has not been declared, the money owner will have to bear responsibility. When purchasing the "Zoloto Nomadov" program, such risks are excluded.
It is important to take into account, that securities, which emitters registered outside the Republic of Kazakhstan, are subject to mandatory declaration of individual income tax and the income tax must be paid from the amount of income.
More information about the program: zolotonomadov.kz, Call center - 3260 (call from mobile is free).