Life insurance – criticism and disadvantages
Life insurance – criticism and disadvantages, That is why life insurance is currently less worthwhile
Reduced profit sharing and reduction of the guaranteed interest rate
In recent years, the surpluses and thus also the returns of the insured have fallen continuously. In addition, the falling guaranteed interest rate currently leaves little hope for higher distributions. In many cases, however, early termination of the contract is not a good solution.
Different types of life insurance – different disadvantages
There are several types of life insurance, each with its own disadvantages. For example, a major problem with endowment life insurance is that the often high contributions only yield a small return. Term life insurance is relatively cheap in comparison, but the payment is only made in the event of death.
With unit-linked life insurance, the chances of return are better, but the risk is also higher than with endowment life insurance. Here it is also important to pay attention to the potentially very high administrative costs. Index policies combine return opportunities with the guarantee that profits, once made, will be retained, but there is no guaranteed interest rate here.
If you are interested in taking out life insurance, you should also note that the capital saved is taxable in most cases. Only contracts that
- completed before January 1, 2005
- have a term of at least twelve years
- at least 5 years of which have been paid into the contract
- and were paid out before the age of 60
can be completely exempt from tax. Contracts concluded after December 31, 2011, can only be taxed on half after the age of 62. With regard to the taxation of life insurance, there are many other regulations that you should consider before taking out a life insurance policy.
binding to the contract
If you take out life insurance, you should be aware that you have to pay into these contracts over a long period of time. The contract must run for at least twelve years so that the capital saved does not have to be fully taxed. During this period, the insured is bound by the contract. Because if he terminates him before the end of the contract period, he has to reckon with high financial losses. Before signing up, you should consider that the life insurance contract ties you to constant expenses over a long period of time. However, it is possible to make the contract temporarily free of contributions.