What does life insurance cover
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Capital-forming life insurance has several goals:
- It secures the life of the insured person financially and at the same time provides for the surviving dependents.
- Its job is to build capital. You usually save over a longer period of time. For the savings component, you receive guaranteed interest and, in addition, a share of the current profits of the insurer through a profit participation.
- In addition, in certain cases you can borrow from a capital-forming life insurance policy and thus use it as security for a loan.
- Return: Interest rates, which have been low for years, are having a negative impact on the level of profit sharing. Also, watch out for premiums and costs.
- Notification requirement: Do not take the pre-contractual reporting requirements lightly. Answer the questions asked in the application before signing the contract truthfully and completely! Otherwise the insurer is entitled to withdraw from the contract or can even challenge it for fraudulent misrepresentation.
- Capital market risk: If life insurance is taken out as a unit-linked insurance, you as the policyholder usually bear the capital market risk. Because if your contributions are invested in investment funds under this model, you may miss the hedging target if the fund in question develops negatively.
With the exception of purely unit-linked products, you generally receive a guaranteed interest rate on the savings part of the contract. In addition, you share the insurance company in the surpluses and in the valuation reserves. The exact modalities can be found in the general terms and conditions for endowment insurance of the respective insurance company.
- As the policyholder, you have to pay your premiums on time.
- Answer the health questions in the application truthfully and completely. Otherwise you risk your insurance coverage.
- Further obligations of the policyholder are listed in the general terms and conditions for capital life insurance of the respective insurance company.
- You can also get life insurance on someone else's life. In this case, the insured person must consent to the contract in writing before it is concluded. However, this provision does not apply, among other things, if the agreed service does not exceed the amount of the usual funeral costs of currently € 8,000. Such a consent requirement is also not prescribed for collective agreements in the area of company pension schemes.
If you do not want to keep your capital-forming life insurance, it is possible to terminate the contract. The insurer then pays you what is known as a surrender value.
In principle, you do not need to observe any notice period if you want to terminate insurance contracts in which regular premiums or a single premium are paid. However, if regular premiums have been agreed, the termination will only take effect at the end of the current insurance period, i.e. usually at the end of the first insurance year at the earliest. The period of time after which the premium is calculated is referred to as the insurance period. Usually this is a year.
Let us advise you whether there is an alternative to terminating the contract. Because if you terminate the contract, this can have significant disadvantages for you. At the beginning of the term, there is only a minimum surrender value. In the following years, too, the surrender value will usually not necessarily reach the amount that has been accumulated over the course of time through the contributions you have made.
The details of the requirements and consequences of termination can be found in the general insurance conditions on which your contract is based. To be on the safe side, you should read these again before you cancel.
It is also possible that the current contributions have become too high for you. Then you can either reduce this - if contractually agreed or with the consent of the insurer - or make the contract entirely free of charge. Then the obligation to pay premiums no longer applies, but the contract is still continued with reduced benefits. Details on the requirements and consequences of the exemption from contributions are also listed in the general insurance conditions on which your contract is based.
The Advisory and documentation obligations of the insurer result from § 6 Insurance Contract Act (VVG).
The following information the insurer must provide according to § 7 VVG in connection with the VVG information obligation regulation (VVG-InfoV):
- Product information sheet: It contains the information for the consumer that is of particular importance for the conclusion or fulfillment of the insurance contract (see § 4 VVG-InfoV). The direct and indirect costs including one-off and recurring costs should also be pointed out here. The content and appearance of this EU-wide standardized key information document (KID) are based on the PRIIPs regulation.
- Customer information: It contains information about the insurer, the services offered, the contract and options for legal protection (see Sections 1, 2, 5, 6 VVG-InfoV).
- General Insurance Conditions: General insurance conditions for capital-forming life insurance.
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