Mixed life insurance:
The most common form of life insurance
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Mixed life insurance is the most widely used form of investment for free provision within Pillar 3b. It is referred to as mixed because it links financial savings for survivors in the event of death with a savings plan for old-age provision. The benefits are guaranteed at the end of the agreed term or in the event of death and are paid accordingly. After the end of the agreed term, the capital invested plus any interest accrued is paid out. In the event of the death of the policyholder, the beneficiaries receive the corresponding sum as collateral.
Mixed life insurance is financed either by regular payments or by a single premium. Of the premiums, the insurance company pays a portion of the final and administrative costs, which may differ depending on the insurance and the insurer. Accordingly, a comparison of life insurance policies should be quite thorough. The final and administrative costs also correspond to a percentage of the insurance sum taken out, which is why, in the case of high sums, the premiums of the first years only cover these costs. Anyone who wants to terminate their life insurance at an early stage will lose money, which is why the conclusion should be properly considered from the outset.
Mixed life insurance interest rates
It is important that the advertised interest rates are correctly estimated. The technical interest rates, which are often advertised, do not say much about the actual amount of the return yielded by the insurance at the end. Part of the premiums are used to pay the final and administrative costs, while another portion is set aside for risk insurance for death, disability and, if necessary, incapacity for work. Only the rest is then remunerated with the advertised interest rate, which is why the actual yield of mixed life insurance as a form of investment can be significantly lower than expected. It is often difficult to understand how much lower the interest rates actually are in the end and a lot depends on the type of insurance. Whether life insurance as a voluntary retirement pension is really worthwhile varies from case to case.
When mixed life insurance makes sense
Life insurance as voluntary old-age provision is useful when a pension gap exists, which can occur particularly in the event of incapacity for work or death. For this, however, it is necessary and advisable to draw up an accurate pension analysis, which varies from case to case and accurately determines the size of the pension gap. In many cases, however, it is advisable to separate the savings and insurance, and only take out a risk insurance and to choose another type of savings. A mixed life insurance is only useful if you opt for an insurance policy with high guaranteed benefits and a manageable duration.
Whether you opt for mixed life insurance or not, good advice always pays off
Given the many options for private retirement provision, it is not easy to always find the best form of investment in order to optimally provide for retirement. Finding the right options is always dependent on your personal and financial situation. While one person might benefit from mixed life insurance, others will be much better off with alternative pension solutions.
At MoneyPark, we are always happy to provide you with professional and independent advice. We can find you the best pension plans, make a pension analysis and determine whether a mixed life insurance will work for you or not. In addition, we are at your side when it comes to finding the best offers and options. Just make an appointment with a MoneyPark consultant in your area.
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