Cash surrender value

As a buy-back is defined as the termination of a life insurance policy by the policyholder, provided that in the event of termination by agreement or by law, a surrender value is payable.

In the original sense of the term "purchases " the insurer the claims of the insured under the insurance contract by the policyholder "back". As the initiative to buy back usually starts from the policyholder to the speech has naturalized that the policyholder to "redeem " the contract, even though he is the one to whom it is entitled to a payment.

Must be distinguished from the repurchase on the secondary market for life insurance, where some companies buy insurance policies, they continue - which then in turn can be redeemed by the policyholder, so he holds his Police at the end again.

Who is allowed to buy back?

Legal regulations

For life insurance contracts, " in which the occurrence of the obligation of the insurer is certain ", the policyholder is in accordance with the Insurance Contracts Act ( § 169 of the SGA Germany, § 176 SG Austria and Article 91 SG Switzerland ) at any time at the end of the current period of insurance basically a surrender value to. This is basically a right of repurchase, if indeed there is a positive surrender value at this time.

Are particularly affected

  • Life insurance on the death and survival
  • Private pensions in deferment period with premium refund in case of death and in the pension age in the case of pension guarantee
  • Education insurance
  • Death benefit insurance

Contractual arrangements

For other life insurance contracts, a right of repurchase will only be given if this is contractually agreed. A contractual right to repurchase the policyholder is often given reason after all life insurance and disability insurance. However, many contracts is the surrender value in the initial period, if not over a ( large ) part of the contract period zero.

Pursuant to § 169 paragraph 2 SG Germany no surrender value for Lebens-/Rentenversicherungen is provided, in addition to the endowment no other biometric risk ( disability, death benefit, premium return ). A return except in so far can only provide an additional contractual agreement.

Insurance without right of repurchase

The following insurance companies are not redeemable in many cases:

  • Annuities in the deferment period, in which no death benefit has been agreed ( regularly not surrender, and to avoid adverse selection )
  • Annuities in pension ( regularly not surrender, in order to avoid adverse selection )
  • Term life insurance (usually surrender value zero or already on the merits not redeemable )
  • Basic pensions (due to statutory requirements not redeemable ); these are made rather contributory.

An individual policy it is possible to agree on a full or partial recovery exclusion. This has the consequence that the insurance can not be redeemed in whole or in part. Significance of this case for the kinds of insurance entered into in connection with the external division of rights in the supply balance in the context of divorce proceedings, or to hedge against recovery options in case of insolvency or Hartz IV serve.

Special feature of direct insurance

A direct insurance can not be purchased by the employee, as the right of termination is only payable to the employer as the policyholder. A recovery prohibition is regularly until retirement, even after leaving the operation, especially when transferred to a new policyholder ( new employer ).

Legal consequences of the buyback

For repurchase in accordance with the statutory provisions, the insurer is obliged to inform the policyholder to pay the cash surrender value. However, this exceeds the performance that would be payable in case of death, will be paid only in the amount of death benefit and the excess amount is used for the formation of a non-contributory insurance.

As part of the surrender value of the insurer to the policyholder to pay the already allocated profit shares, provided for in the event of termination terminal bonus when the contract completions since 2008 also at least half of the allotted to this contract valuation reserves.

For repurchase pursuant to contractual agreement, the legal consequence, which is agreed in the contract.

By buying back the insurance contract expires.

Economic aspects of the buyback

By buyback ends in Germany, about every third life insurance. This redemption is economically disadvantageous for both the policyholder and the insurer in the early days. Economic benefits of a buyback contract in the late course depends on the circumstances of each case.

The surrender value is reduced according to the contract by a cancellation tee and may account for certain long-term benefits from the surplus participation, especially in the context of terminal bonuses. Already paid posts, facing no compensation, mostly because they were intended to cover closing costs, go at most partially included in the determination of the surrender value. Finally, results in contracts that were concluded after 2005, a repurchase prior to the expiration of 12 years for income tax.

The insurer miss the subsequent premiums and the prospect of re-investment of the insurance benefit. In the early days of work already done, but not yet covered, closing costs can not be recouped.

Alternatives to repurchase

For a policyholder who is in economic difficulties, there is to repurchase the following alternatives:

  • It may obtain the contribution exemption request under the statutory requirements.
  • He may try to "sell" his assurance in the secondary market for life insurance to.
  • He can apply for a policy loan from the insurer.
  • He can only buy back the contract with the insurer's consent "partial".
  • Insurance Law
  • Insurance
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