Comparing Different Investment Forms

KEW WORDS 

1 Rules for investment of life premium reserve 

2 Differentiation of clients Liquidity Volatility 

The most popular life insurance is the so-called savings type insurance. (Here the term “saving” refers to the function of insurance in a wider sense, the same way as the term “pension” in pension insurance, this way we do not deal with it in the categorisation of insurance. 

1. This practically means endowment insurance, insurances with an endowment element, term fix insurance and unit linked insurance.) Generally more than 90% of the portfolio of most life insurers consists of such policies. These products are in tight competition from one part with similar products of other insurers, and from the other part with savings forms outside the insurance sector (and primary in this respect). If someone wants to invest money wisely, than he has to consider which option to choose from the numerous possibilities. This chapter provides help in this consideration.

2. The offered products of life insurers can be compared based on the following questions:

• Precisely what products do the individual insurance companies offer – (viewed from

the benefit side)?

1 How do they differentiate between the individual groups of client?

2 What is the magnitude of expenses accounted by the insurer on the product?

3 What kind of inflation handling and profit sharing technique is used?

The above aspects can be applied to both traditional and modern insurances, although

sometimes in a different way.  

3. The Hungarian insurance market shows a relatively consolidated picture. This means that regarding the major features, all insurance companies offer the same products, and the products of individual companies differ mostly due to the unique combinations of the different possible element. According to the above, almost all insurance companies offer term insurance, endowment insurance, term fix insurance, unit linked insurance and single premium, immediate annuity. 

4. So the aspect of comparison is how the given insurer guesses the needs of some classes more precisely than rival companies through the right combinations. Of course there are some insurance companies that are specialised in a certain sales channel (these are primarily banks), and this limits the possible benefits of its product group. E.g..

5. The equivalence principle declared in chapter 9 expresses equivalence in two senses: 

1 In the first sense: it expresses the equivalence of the income and outgo items of the insurer; 

2 In the second sense: it expresses the equivalence of the unique risk of the insured and the premium he 

has pays. We have already discussed the first type of equivalence. The second type of equivalence belongs to the current chapter.