There are two types of life insurance. Endowment allows you not only to receive the insured amount in case of an accident, but also save money by a certain date. Upon the agreement expiry, the accumulated amount is paid with interest. The guaranteed return is 3-5%. Interest is accrued three years after the start of the insurance policy.
With term insurance, the money is paid only if a person is injured or passes during the validity of the insurance contract. If the insured lives up to the specified term in the full of his health, he does not receive anything. The insurance premium is significantly lower than in endowment. It can be a tenfold difference.
Example:
Imagine you have entered into a life insurance contract for 20 years. You pay 100,000 tenge to the insurance company every year. In 20 years’ time, having received 2,000,000 tenge and interest, you can spend this money on children’s education or other purposes.
By concluding a term life insurance agreement, you pay 15,000 tenge annually. You will not get anything in 20 years. However, if an insured event occurs, you or your family will be paid 2,000,000 tenge, if such an insurance coverage is specified in the contract.
Insurance payment guarantee
The National Bank of Kazakhstan is a member of the International Association of Insurance Supervision Bodies (IAIS). This means that the regulator closely monitors the activities of insurance companies. By law, each insurance company is obliged to cover its risks with another insurance company, most often it is a foreign insurance company with a high international rating. One insurer is reinsured with the help of another insurer. Thus, the insurance coverage under the term and endowment insurance programs is guaranteed to be paid to all insured.
Insurance for the young
Young people rarely think about life insurance, though it can help save money for various purposes and protect interests in the event of injury. The younger you are when you conclude an endowment life insurance contract, the lower the premiums will be and more money you will receive at the end of the term.
The most negative scenario
If the insured person dies, his heirs will receive the entire insurance coverage within 30 days, regardless of how many contributions he has managed to make. If a person is injured as a result of an accident, the insurance payment will be recalculated as a percentage of the final amount.
That is, if you fracture your arm, you will receive money under the life insurance contract but this amount will be less than what you will receive when the contract expires.
Additional benefits
According to the Tax Code of the Republic of Kazakhstan, contributions under endowment insurance contracts are not subject to income tax, which means you save 10%.
Thus, if you annually pay 100,000 tenge under the policy, 10,000 tenge of income tax will be returned to you. Moreover, your money is covered by the deposit confidentiality, it cannot be confiscated and not subject to divorce settlement.
It is important to remember:
Endowment life insurance has a long history. If you decide to terminate the contract early, you will return less than you have invested.
The profitability of endowment life insurance is 3-5%, which is less than that of deposits but more reliable. No bank will put your money on a deposit for 20 years, and a life insurance contract is concluded just for a period of 5 to 20 years.
Endowment life insurance as a financial instrument is suitable for people far removed from financial discipline. It will help save money for an important event or simply create additional income in retirement protecting a family from tragic accidents.
Source: https://www.fingramota.kz/insurance/life-insurance/
Photos are from open sources.
