Lapse of the guarantee only affects new insurance contracts
Of course, it’s only about contracts that are now being signed. In the case of Riester policies and company pension schemes, the payment of contributions is required by law: the guarantee continues to apply here.
But why should you conclude a contract that runs for decades and that could result in losing money ?! Allianz’s answer: Because this is the only way to generate a return at all.
More chances, but also riskier investments
The interest rates for safe investments are known to be close to zero, and the trend is negative. And these low interest rates should stay with us for a very long time. With the now reduced guarantees, the strictly regulated insurers can invest their customers’ money more riskily but also with more opportunities – for example in real estate, infrastructure projects, renewable energies or bonds from emerging countries.
Significantly higher payouts are possible, but not guaranteed
This message has apparently already arrived. “In surveys, two-thirds of our customers told us that they no longer need a 100 percent guarantee if the return opportunities increase,” said Volker Priebe, member of the board at Allianz Leben, the “Handelsblatt”. And “without a premium guarantee” doesn’t mean that you can lose all of your money. Rather, Allianz wants to guarantee payouts “depending on customer requirements” that “are at a level of at least 90, 80 or 60 percent of the contributions paid”.
Significantly higher payouts are definitely possible – but they are not guaranteed. Nobody knows today whether the provider’s bill will really work out and whether the customers will end up doing better overall because of the riskier investments.
“A look into the past shows that life insurers have often not achieved the surpluses promised, but mostly significantly less,” warns Niels Nauhauser, financial expert at the Baden-Württemberg consumer center. “Because of the high costs and the non-transparent benefits, life insurance is not the first choice if you want to make provisions for old age.” It could be different with policies that are particularly promoted, for example in the context of company pension schemes: “You have to take a closer look at the offers, ”says Nauhauser.
A boring form of savings becomes a “risk investment”
At the beginning of the end of the premium guarantee, the Association of Insureds clearly stated: Life insurance will become a “risk investment”.
And you will have to get used to it. In any case, the German Actuarial Association, the industry association of financial and actuarial mathematicians, no longer considers products with a 100 percent premium guarantee to make sense “in today’s world of negative interest rates”. Because: “They narrow the scope for capital investments in the interests of the insured.” The actuaries therefore advocate abolishing the contribution guarantee, for example for the Riester pension.