Hi guys! Today, I am back with an interesting topic, ‘equity-linked life insurance.’ Some of you may have no idea about what it is. Equity-linked life insurance is also called ‘variable insurance’, ‘inverse fund’, or ‘flexible premium.’
An equity-linked life insurance is a distributive insurance product that lets a policyholder invest in stocks, long and short term bonds, debentures or marketable securities using premium reserves. When policyholders invest in those financial products, they can expect productive outcomes. However, they are also at risks from time to time.
In case of Korea, insurance companies have been allowed to sell equity life insurance products since 2001, and these products are now being considered as the main insurance commodities. In Korea, there are three types of equity-linked life insurances;
1. Variable straight life insurances
For variable straight life insurance, death benefit may vary depending on the amount of investment, while it guarantees the minimum amount of death benefit.
2. Variable annuities
The amount of pension depends on how much a policyholder has put investment capitals for variable annuities. Variable annuities guarantee the principal. However, if a policyholder rescinds it in the middle of the contract, he or she may not be able to get a surrender value.
3. Variable universal insurance
This is one of the most popular life insurance products. Why? It allows a policyholder to withdraw the accumulated insurance payments without restrictions. Moreover, depending on one’s financial status, insurance payment can be postponed. Lastly and most importantly, one can overturn this into a pension.
So, if you are thinking of having one of the products, please keep aware of the following advice.
First of all, think about your own financial status and plan before choosing a specific financial product.
Second, set a long-term plan rather than a short-term.
Third, you should understand and calculate how profitable a financial product is.
Lastly, keep your eyes on the financial products in your hand.
Hope this blog post helps you design your plan to have an equity-linked life insurance.