Before Taking Out a Life Insurance Policy

Before taking out a life insurance policy, remember the following:

• Contracting parties: the policyholder pays the insurance premium, the insured party is covered by the agreement, and the beneficiary receives compensation in case the insured event occurs.
• Costs: the premium – i.e. what the policyholder pays for the policy – also includes the loading costs, needed by the company to process and manage the agreement.
• Time restrictions: an insurance policy is not a financial investment that can be disinvested at any time; it is subject to time restrictions that sometimes cannot be waived, or sometimes only on payment of a penalty. It is important always to have a clear idea of these time restrictions.
• Underlying investments and related risks: life insurance may involve a financial risk. Clients are advised to evaluate their own risk tolerance before subscribing to these products.  
•  Guarantees: may apply to various elements in the policy (e.g. level of the rate of return, refund of initial capital, etc.) Always check if this is stated explicitly.
• Additional guarantees: if provided, it is important to verify their usefulness and understand whether additional costs are involved, which should be explained.
• After-sales assistance: the steps following the signing of the policy are important and should be agreed upon. Insurance agents do not just sell policies, they assist clients over the entire life of the agreement. If a client has any queries, the agent must be available to answer them.
• Taxation: insurance policies often provide tax benefits, which should be taken into consideration in the overall evaluation of the product.
• Insurance policy succession: by their very nature (e.g. the designation of a beneficiary in case of death), insurance policies are not treated in the same was as other inherited assets.