Defining the goal of savings: the goal will determine how much money is needed and by what time. These are usually long-term large-scale tasks: to save money for children’s education or own pension, to provide start-up capital for a business. The market, however, has enough interesting offers for short-term investments as well.
After choosing insurance company and a suitable program we conclude a life insurance contract. The client must pay the insurance company the entire amount according to the agreed schedule while the agreement is valid. For example, if you want to save up 5 million rubles for an apartment for your child by the age of majority who is now 8 years old, you can conclude a contract for 10 years. Every year you will need to pay a total of 500 thousand, the schedule depends on the chosen tariff. Endowment payments are monthly, quarterly and annual, but it is even possible to pay the entire amount at once on short-term programs.
Receiving insurance benefit when the contract term expires, or insurance event occurs provided for by the agreement (disability, critical illness or death of the insured person). If client is unable to continue paying premiums for the reasons specified in the contract, the insurance company will pay them for him until the situation improves or the full amount is paid. The insured, who survived until the date specified in the agreement, and paid the entire required amount, would receive his money with interest.
In terms of mechanics, it is similar to a bank deposit, money is also accumulated in one place with interest accrued on it, an early withdrawal without financial losses is not provided for in most programs. But banks do not offer the client any additional protection in case he can no longer replenish the account. At best, the balance will remain unchanged with interest accrued on it as long as the deposit is valid. At worst (if the agreement with the bank implies minimum monthly income, for example), one will have to pay higher fees or lose interest.
Straight life insurance gives peace of mind and guarantee in case of death, disability, illness or general working capacity loss. But payments to the beneficiary are due only in case of insurance event occurrence. Thus, these programs do not help increase capital.
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