When life insurance is mentioned, very different things are often meant. This is mainly due to the fact that it is, on the one hand, an instrument of risk protection (economic disadvantage caused by the death of the policyholder) and, on the other hand, a tax-privileged form of financial investment. These two forms are occasionally combined. Read here about the different types of life insurance, how they work and why you should take out life insurance. The life insurance comparison on durchblicker.at focuses exclusively on life insurance, also known as term life insurance.
Types of life insurance
“Life insurance” is an umbrella term that can refer to different types of insurance. On the one hand, it can be a cover for relatives or a loan guarantee (life insurance). On the other hand, it can also be a form of savings for old-age provision (life insurance). You can find out which types are basically there and how they differ here.
- Life insurance / risk life insurance
- Experience insurance
- Life and death insurance
- Unit-linked life insurance
Reasons for taking out life insurance
Depending on the individual reason for taking out life insurance, different products are better or less suitable. In the following you can read which type of life insurance is best suited to different reasons for taking out a contract.
- Protection of relatives
- Loan protection
- Tax advantage
- Additional reasons
Composition of the premium
Before you compare the premiums of different life insurance providers, you should familiarize yourself with the terms “tariff premium”, “profit sharing” and “payment premium”, which we briefly explain below.
- Tariff premium
- Profit sharing
- Payment bonus
- Additional reasons
Factors influencing the premium
The amount of the insurance premium for life insurance depends on various parameters. You can find out what these are and what influence they can have on the premium here.
- Age and term
- Smokers vs. non-smokers
- Dangers at work
- free time activities
Constant vs. falling life insurance
The sum insured of a life insurance does not necessarily have to remain constant during the term. A falling sum insured is particularly common for credit protection.
- Constant sum insured
- Linearly decreasing sum insured
- Insured amount falling according to the annuity
Forms of credit protection
If your credit institution requires the protection of a loan by means of a life insurance policy, then you usually have to grant the lender appropriate rights to this life insurance policy. There are different variants that differ in legal and tax terms.
- Pledging life insurance
- Restriction of transferability
- Assignment of life insurance
Life insurance is used to provide financial security for the insured’s surviving dependents or to build up the insured’s capital. Life insurance can be designed differently depending on the needs of the policyholder. Depending on the type of contract, it serves purely as a financial security for the surviving dependents in the event of the death of the policyholder, or in addition to building up capital or as a pension insurance for the policyholder himself.
Forms of life insurance
There are two basic types of contract possible for life insurance
- Term life insurance
- Endowment life insurance
Term life insurance: This type of contract is also known as risk insurance or life insurance. The term of this insurance is generally limited in time. If the policyholder experiences the end of the contract period, no sum insured will be paid out to him. If the insured person dies during the term of the contract, the insured sum will be paid out by the insurer to the surviving dependents. With term life insurance, contracts with a constant, increasing or decreasing sum insured over the term are possible.
Endowment life insurance: With this form of life insurance, two insurance cases are possible. The first possible insured event is when the agreed insurance term expires, the second is the death of the policyholder before the end of the insurance term. In the first case, the policyholder receives the agreed sum insured plus a guaranteed minimum interest rate and possibly plus a so-called surplus participation as a one-off payment or in the form of a monthly pension. In the second case, the payment is made to the surviving dependents of the policyholder or other beneficiaries named in the insurance contract.
Forms of endowment life insurance
Different types of contract are possible for endowment life insurance
- Lifelong death insurance
- Insurance in the event of death or survival
- Insurance with a fixed payout date
- Endowment insurance
Lifelong death insurance: With this life insurance, the agreed sum insured becomes due in the event of the death of the insured person. This insurance is also called death benefit insurance in its original form.
Insurance in the event of death or survival: This life insurance is the classic and most commonly agreed form. The sum insured is paid out in the event of death or at a contractually agreed time.
Insurance with a fixed payment date: Here, the insured sum is only paid out on a fixed date, even after the policyholder’s death. The obligation to pay premiums ends with the death of the insured person.
Endowment insurance: With this life insurance, the insurance benefit is due when the insured person experiences a specified point in time. The payment can be made as a one-off payment or as a pension. Pension insurance usually includes a guaranteed minimum pension duration and, if the insured person dies before the deadline, the premiums paid are often reimbursed to the surviving dependents.
Insurance premiums and bonuses
The amount of the insurance premium (premium payment) depends on the type of life insurance, the age of the insured person when the contract was concluded and the contract period.
In addition to the guaranteed minimum interest, the profit sharing is an important part of the insurance benefit. This is a forecast of how the invested capital is likely to develop. The surpluses can result from higher interest income, lower mortality, or savings in the costs of the insurance company. At least 90 percent of higher interest income, 75 percent of profits with lower mortality and 50 percent of cost savings must be paid out to the policyholder.