Compare products using the key information document!
Did you know that you can compare classic, index and fund-linked life insurance plans at any time? There is a standardised key information document to do so. It contains the most important information about insurance-based investment products in a concise form and must be published on the insurance undertaking’s website. It is intended to help you to understand the typical features of the product. The insurer is required to address the following points:
Transparency of charges
You must be informed about the total amount of all charges relating to your life insurance product and their impact on the amount you are paid out at the end of the term of the contract.
The overall risk indicator helps to you to estimate the risk associated with this insurance-based investment product compared to other products. It shows how high the probability is that you will lose money with this product, because of the markets developing in a certain way, or the insurer not being in a position to pay you out. There is a 1-7 scale for risk classes.
This must be available at all times on the insurer’s website. A specimen calculation states what performance you can expect in the case of investing 1,000 Euro annually, or 10,000 Euro lumpsum over the course of a specific time frame, depending on the scenario.
You must be informed whether a loss is covered by a compensation or protection scheme, and if it is by which scheme, as well as who the protection provider is as well as which risks are protected against and which not.
What are insurance-based investment products?
Insurance-based investment products are life insurance policies that not only provide coverage in the event of death, but which all also carry the opportunities and threats associated with an investment. In the event of death or survival they are of value for the insurance policyholder. Generally they are a mixed product made up of the hedging of risks and investment of money.
Classical life insurance
The insurance guarantees a specific insured sum as well as surrender values, upon which a guaranteed rate of interest is paid.
Fund-based life insurance
Your savings premiums are invested in investment funds. This increases the possible returns as well as the risk of capital loss. Usually there is neither a guaranteed rate of interest nor a capital guarantee.
Index-linked life insurance
The performance of the insurance benefit is tied to the performance of an index or benchmark. The performance of the savings-based portion is tied to how the index performs. As with fund-based life insurance plans, such products are chosen for an opportunity for a higher return.
IndexIt shows the performance of a specific selection of instruments, for example shares, bonds or even commodities or services.
Cover pool (Deckungsstock)Protection Scheme in Austria. A pool of assets that is managed separately from the insurance company’s other assets. This ensures that the customers’ claims can be satisfied at all times. In the event of bankruptcy, the Deckungsstock forms a special fund, from which the claims of the insured persons are paid out preferentially.