Investing for life
Life insurance in the traditional sense is slowly becoming a thing of the past. People are increasingly using their life insurance policies as a means of saving and even investing one's surplus assets. "Life insurance with a saving, or investment function is the most popular among our customers," Bohdan Białorucki, a spokesperson for Grupa Commercial Union Polska said. The director of the marketing and PR department of Nordea Polska Towarzystwo Ubezpieczeń na Życie (Life Insurance), Mieczysław Putkowski, notes that most customers opt for insurance packages offering long-term saving or those which are investment oriented.
Future needs
"Insurances with an investment function can be used as a long-term means of gathering capital for one's future needs such as pension, or for the education of one's children," Białorucki says. In life insurances with a savings option, the company itself defines the investment strategy and guarantees the client a certain rate of return. In the investment-oriented packages the insurance company usually has a number of investment funds from different management companies for the client to choose from. In this aspect, insurances do not differ much from a regular investment fund. However, it does have a number of advantages.
"The client can choose between a number of fund management companies and build his own portfolio from the different funds offered," an expert at financial advisory company Expander, Maciej Kossowski, says. Furthermore the client can freely move thier assets between funds as well as fund managment companies without having to pay the tax on interest rate profits. "As a life insurance package, the investment is exempted from the inheritance tax," Putkowski said.
Safety net
"A life-insurance package is very important not only for the person insured, but particularly for his loved ones," says Białorucki. He explained that it is absolutely necessary for sole providers with small kids and debts. "In case of the provider's death the life insurance saves his loved ones from a financial catastrophe," he said. He also added that a life-insurance package is required as an additional safety measure when applying for loans. "All in all, every person, on whom the well-being of others depends, has a good reason to buy such insurance," Białorucki concludes.
Risky business
"The higher the risk of the person dying, the higher premiums are," Putkowski says. He explained that apart from obvious elements such as age and medical record, other issues influence the rate of the premium. "If a person practices an extreme sport even as a hobby, or has a dangerous profession like a war correspondent, that also effects the premium," Putkowski said. He added that gender also has an effect on the amount we pay to the insurance company, as the average life expectancy for women is much higher than that for men.
