5 reasons for private life insurance

5 reasons for private life insurance

Life insurance is still the basis for private supplementary pensions and family provisions. With life insurance, you can create a lifetime income with maximum security. The following 5 reasons speak for it. 

Additional pension for life

The quality of life in Austria is also reflected in these figures: In 2014, the average life expectancy of male newborns was 79.2 years, and that of females even 84.0. This means that the life expectancy of men has increased by 109 days per year and that of women by 80 days (source: Eurostat). 

This increase in life expectancy will continue in the coming decades. Only life and pension insurance can guarantee payment of the pension for life. 

The premium-privileged future provision offers special advantages: It is exempt from insurance, capital gains, and income tax. In addition, the savings premiums paid are currently subsidized by the state at 4.25%. When it comes to old-age provision, it’s not just the return that counts, but also the security of the capital paid in – especially the guarantee of a lifetime private pension. Only life insurance offers this level of security.


Supplement the state pension

The statutory pension system in Austria is one of the best in the world. We will continue to receive state pension benefits in the future. The only question is how high the pensions will be in the future.

In 2016, including the costs of civil servants’ pensions, 19.0 billion euros flowed into our pension system – that’s 23.4% of all tax revenue! In the past 20 years, the pension system in Austria has been reformed many times. As a result, there were always cuts in the pension amount. Due to the budgetary situation of the republic, further reforms are to be expected. That’s why you should take extra precautions early on.

Protect the family

Classic life insurance combines insurance protection with asset accumulation. That’s why she’s so popular. It is the only pension instrument that not only protects the surviving dependents but also longevity – whether in the classic, state-subsidized, or unit-linked variant.

Another big advantage of classic life insurance: You are entitled to the full agreed sum insured – for example, to protect your family – as soon as you pay the first premium. The premiums not only finance the accumulation of capital but also cover the cost of the risk of death. In the event of survival (at the end of the contract), the insured person may choose between one-time payment or payment in the form of a guaranteed annuity for life.


Maximum security for your money

The investment of customer funds in life insurance is subject to very strict rules. Every life insurer must ensure that customer claims are met at all times. Customer funds must always be fully covered by assets and are invested in the so-called cover pool. Even in the unlikely event of a life insurer going bankrupt, these funds are secured because, as special assets, they do not fall into the bankruptcy estate.

Compliance with legal requirements is monitored, among other things, by an independent expert trustee appointed by the Financial Market Authority. In the second republic, not a single insurance company in Austria got into trouble. The legal regulations result in an extremely low-risk investment policy geared towards value retention. All guarantee promises were kept 100%.

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