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Life insurance companies are adapting their product line under the new amendments

The Mazhilis approved a draft law on the regulation and development of the insurance and securities market. Thus, the document allows Kazakhstanis to buy joint retirement annuities; for insured borrowers there is a limit on the insurer's administrative expenses of up to 10% upon termination of the insurance contract in case of early repayment of the loan. Besides, Kazakhstanis will be able to save money for their children’s education with insurers’ help.
Life insurance companies are adapting their product line under the new amendments

This year, changes are expected under the retirement annuity agreement. It will be possible to conclude a joint pension annuity, this is when one of the spouses (close relatives) does not have enough funds in the UAPF, and the other has a surplus. Provided that the combined amount will allow make monthly insurance payments of at least 70% of the subsistence minimum for each of the spouses. This will allow receiving annuity payments to persons who did not have such an opportunity before. “On another product “Compulsory insurance of an employee against accidents in the performance of his labor (official) duties” (hereinafter referred to as CAI), a simplified procedure is provided for when collecting documents, disability, medical information, etc. to make an insurance payment, if the UIDB has confirmation of the relevant information. The employer will also be required to provide a copy of the annuity agreement to the injured employee, therefore, the injured employee or his dependents will be assuredly informed about the insurance payments due to them,” explains Zhanar Zhubaniyazova, the Board Chairman of LIC Halyk-Life.

The changes will also affect the life insurance of borrowers. For individuals, there is a limit on the insurer’s administrative costs of up to 10% upon termination of the insurance contract in the event of early repayment of the loan, similar conditions for the limit of agency fees in case of early termination within 14 calendar days from the date of conclusion of any insurance contract, except for the retirement annuity agreement and annuity contracts concluded as part of fulfillment of obligations on compulsory accident insurance.

“The borrower's life insurance contract will also specify the agency fee amount. All these changes will create more favorable conditions for life insurance of citizens applying for loans,” the interlocutor noted.

Several domestic banks offer educational deposits to Kazakhstanis today, briefly, SES. The state annually adds its own premium of 5% or 7% to the rate of up to 9% on these deposits. Life insurance companies, along with banks, will be involved in this state program, where the savings of their clients will be subsidized by the treasury.

Product transformation

“We expect to bring a new product to the market this year. SES provides a unique opportunity for all Kazakhstani citizens to accumulate funds in advance for their children’s education with state aid on insurance premiums - 5% and 7% (for large families). Given that endowment insurance will be more attractive due to state aid, we expect an increase in the number of endowment life insurance contracts by several times compared to the current endowment insurance agreements in favor of a child. Since, in addition to savings, which will compete with ordinary deposits, there will also be insurance coverage, in the event of the death or disability of the insured, the insurance payment will also provide payment for the child education,” emphasizes the LIC Halyk-Life executive.

LIC Freedom Finance Life focuses on launching several products, a joint marital annuity and educational policy, in particular. “In the near future, the launch of a joint retirement annuity is expected, which will allow legal spouses to combine savings for opening a joint retirement annuity program. In general, we will continue to develop online insurance, adapt existing products to the online format and create new products. At the moment, the company has launched five online life insurance programs, among them: insurance against coronavirus, voluntary insurance for those traveling abroad, insurance against critical illnesses and endowment life insurance program,” explains Azamat Yerdessov, the Board Chairman of LIC Freedom Finance Life.

According to life insurance company Centras Kommesk Life, endowment life insurance and annuity insurance will be the drivers of the LIC market in 2022. “A promising program for the LIC industry, unit-linked, is an investment life insurance, which is a combination of classic endowment life insurance with an investment component in the form of shares in financial instruments, when the insured himself determines the investment strategy. Financial planning within the framework of a life insurance policy entails two important aspects, creating savings from the money invested and providing financial security in case of unforeseen circumstances," says Gulzhan Dzhaksymbetova, the Board Chairman of JSC Life Insurance Company Centras Kommesk Life.

The top manager specifies that the company is developing new products. “Our company is planning to further promote the products of endowment life insurance, retirement annuity, investment programs, integration with partners to expand the coverage of the client audience. Some products will be digitized with the possibility of registration and purchase on the corporate website in an online format.”

Photos are from open sources.

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