Cash value

The surrender value is the amount paid by a life insurance company in the future repurchase claims by the policyholder from a life insurance contract to the insured for this purpose.

Meaning of the term

For repurchase " buys " the insurer to the policyholder contracted to deliver rights " back " (see Article 90 SG Switzerland and § 169 VVG Germany ).

Therefore, the surrender value is the value of these rights, the future still less by the policyholder to the acquisition of the rights to the contributions payable correspond. This is required by law to pay in case of early termination of the contract termination fee, which relates exclusively to the future mutual claims arising from the contract. The cash surrender value is not based on the contributions paid in the past. It is therefore the surrender value, depending on the value of future rights under the contract in relation to the future for this still to be paid contributions, especially initially well below the sum of paid up to the termination posts. The reason is that the contributions are not only a price for the actual performance to the policyholder, but like any price usual margins for profit and especially operating expenses includes ( for pricing of life insurance according to § 11 para 1 Insurance Supervision Act ( VAG ) Germany and § 18Vorlage: § / maintenance / RIS search para 3 VAG Austria by law). Therefore, the value of future services to be provided from each contract is initially less than the price charged for it. The governed by legislation taking place with payment of the surrender value of a life insurance contract early termination of benefit to the policyholder therefore disadvantageous because the surrender value according to the legal definition of low valued initially as the sum of the contributions paid to date. However, the insurer has previously also done insurance coverage, provided very high performance for which he used after the solidary insurance principle parts of the contributions of all that is, for all deceased insured compared to the contributions.

Initially, increased redemption values

For contracts under the Retirement Savings Act ( AVmG ) and after the Capital Formation Act and contracts, which were concluded before 1994, are or were initially to settle in Germany higher surrender values ​​than would be obtained by calculation with a purely oriented to the future consideration when the insurance company the tariff with complete zillmerisation calculated ( e). Rates, which spread the acquisition costs over the entire contract course, have consistently mathematical reserves at the required height. For completed since 2008 contracts higher surrender values ​​are in accordance with § 169 VVG also beginning to agree. In Austria, § 176 para 5 SG for contracts from 2007 appropriate.

The admissibility of such restrictions on the freedom of contract has, however, been drawn into doubt. The legislators of the EU and EFTA Member States (ie, including Germany, Austria and Switzerland restricted ) may make due to the EU directives only limited govern the features of insurance contracts. In this sense, the EFTA Court in 2005 the state of Norway banned the statutory requirement initially increased redemption values ​​.

Although initially increased redemption values ​​the flexibility of the policyholder increase significantly, they have economically due to the current legal for all policyholders a significant disadvantage. Where a contract provides for a contractually or legally determined buyback value that is above the designated pursuant to commercial law regulations insurance provision, the provision for 2 RechVersV is to raise this amount (in Germany, for example, in § 25 para in compliance with a binding EU legal requirement ) that is to be abolished, however, according to the current state of the debate in the EU. This still existing statutory provision has no impact on the cash surrender values ​​contractually agreed, but only to the fact that the agreement high surrender values ​​have particularly high costs and thus deterioration of the value for money overall result leads. Without this provision, the insurer could offer higher surrender values ​​overall much cheaper.

This provision is in conjunction with the European rules for coverage of claims of policyholders with investments ( eg implementation in Germany by § 66 VAG ) means that an insurer must maintain at all times as many investments that he that at the very unrealistic scenario, the termination of all policyholders satisfy all claims. Therefore, insurers are reluctant to agree to surrender values ​​that are above the otherwise to be applied in the actuarial provision. Although the relatively few early terminating party overall have only a minor advantage of this increased surrender value, means the obligation to make the additional provision for the entire inventory by providing access to investments that are out of proportion to the benefit of early terminating party. These additional financing costs are charged to the services of all insured (insurance community as a whole ), as they are naturally passed on to the prices. Specifically for this reason, the Supreme Court has provided in its judgment on the issue of surrender values ​​in 2005 despite the lack of contractual arrangements ( the surrender value ) a judicial contract amendment, only to the extent of hälftigen division of the difference between a refund and was initially provided for the surrender value. As far as for 1994-2008 signed contracts not initially increased redemption values ​​have been agreed sufficiently transparent, they are still contractually binding.

A solution of the problems with initial acquisition costs there are actually not, because the broker provides its service in the contract, the policyholder that this comprehensive fee but pays much later. This results in an unavoidable pre-financing problem with corresponding pre-financing costs: For distributed commission payment intermediaries to pre-finance its own costs and requires correspondingly higher commissions, otherwise the insurer has to pre-finance the commission payments to the contribution of input and has even appropriate pre-financing costs.

Reimbursement in contrast to the cash surrender value

Termination payments that are based on the contributions paid in the past, called " refund ". Legally, however, the payment of a surrender value, no refund is provided. In order for the business -bodied citizens are not legally from the responsibility they have taken with their contract, dismissed, but will be provided upon termination economically just as they had been in fulfillment of the contract.

Agreement of the surrender value

The surrender value is usually agreed by explicit agreement of each repurchase value to each termination date specified in the contract ( surrender value table, guaranteed value table). The contractually agreed cash surrender value shall not be lower than the legal minimum surrender value ( § 169 para 3 SG Germany, § 176 para 3 SG Austria, the SG Switzerland called for in Article 91, paragraph 3 "appropriate" surrender values ​​under the supervision of the supervisory authority be ). In rare cases, not a concrete surrender value for each year agreed, but directly the legal minimum surrender value. The statutory minimum redemption value based on the value of the contract is, then determine at each termination date in accordance with the then existing conditions of the contract value. According to the law of value to determine the legal minimum surrender value may be reduced even by a reasonable deduction if this is agreed. Above the statutory minimum surrender value lying concretely agreed surrender values ​​can be freely agreed; insofar as it is irrelevant here whether this is a deduction will be made ​​or not, as long as the resulting surrender value is not below the legal minimum surrender value.

Legal minimum surrender value

See German, Austrian and Swiss law before certain minimum requirements for surrender values ​​. Swiss law leaves the determination of the appropriateness of the cash surrender values ​​of the supervisory authority. German and Austrian law provide more detailed requirements in § 169 VVG ( Germany ) or in § 176 para 3 SG ( Austria ). However, these requirements are only minimum standards, one of which according to § 171 VVG ( Germany ) and § 178 para 2 SG ( Austria ) may be waived in favor of the policyholder. In Germany this is the norm, that is agreed upon by German insurers with policyholders in the contract documents by individual specification surrender values ​​are generally more favorable to the policyholder, as required by law. The legal requirements in Austria usually lead to higher values ​​than the German and are therefore generally agreed contractually so.

Basically, see Germany and Austria provide that the surrender value is to be determined at least based on the actuarial basis of the premium calculation. Germany refers here to the policy reserve, Austria to the particular in accordance with recognized actuarial rules, value of insurance. Here, in a contract, reasonable cancellation deduction ( redemption charge ) from this value must still be deducted before it is compared with the surrender value contract. The application of the "recognized actuarial rules " simply mean that the value is to be calculated taking into account all prospective future, discounted to the date calculation cash flows of the contract, as is also explained in the German legislative intent of this law. This is also the meaning of the term " policy reserve ". As in contracting the actuarial basis of the premium calculation, mainly on the basis of the information in the contract are fixed, this results in a clear statutory minimum redemption value for each year of the contract.

This is but the law requires insurers to provide "guaranteed " cash surrender values ​​, which can not be contractually subject to any events. It is doubtful that such a legal requirement complies with the law in the EU and EFTA. Perhaps this means that the provision must be interpreted with Community law and, consequently actually greater freedom in the contractual agreement made ​​when the text of the law suggests.

In Germany lets § 169, paragraph 6 SG in certain cases to a reduction auszuzahlender surrender values ​​by the insurer.

In many contracts, the terms for cancellation deduction are diffuse. There is often the term ' reasonable deduction '. It is unclear what is ' appropriate '; the German legislators have left open in the reform of 2008. The Federal Court 2012 clauses for deduction of a lapse in July declared invalid, in which the insurer used instead of clear Euro amounts percentages (Case No. IV ZR 201/10 ).

Zillmerisation and redemption value

Because of the agreement of surrender values ​​in a table or as a value of the redemption value is still not settled in Germany, Austria and Switzerland as a by zillmerisation to determining value. Until 1994, was required by law, for example, in Germany, that the surrender values ​​of the predetermined according to commercial principles in the business plan coverage provision had to match. The insurance provision was usually determined on the basis of commercial law obligations by zillmerisation. Since changing the SG and VAG in 1994 but have surrender values ​​in legal terms nothing more than that to do with the commercial proceedings with zillmerisation, but are contracted independently. Falsely From a legal perspective but is still spoken by " zillmerized surrender values ​​". In particular, the statutory minimum surrender value, not determined by both the value to 2008 as well as the policy reserve, then by zillmerisation. However, it is grounded in the principle of the surrender value (as opposed to reimbursement ) that this is initially less than the sum of the contributions.

In practice, the provision for a contract usually equal to the agreed in the contract surrender value, if not after the contract circumstances arise, commercial law requiring a deviation of the actuarial provision.

Allocation of acquisition costs

Because surrender values ​​will not regard any future rights and obligations under the Treaty and will operate mostly finalized at contract conclusion, may actually not be included in the surrender values ​​or " credited " incurred acquisition costs. The surrender value is the way it is agreed between the insurer and the insured, without causing any here, " credits " or " settlements " comes from. The related misunderstanding in the public debate based on the fact that the principle of the buyback is confused with the refunding, at the possibly of the back to be paid sum of the contributions made so far still initial acquisition costs could be deducted.

Transparency and consumer protection

The frequently voiced criticism of the transparency of the cash surrender values ​​has its basis in the fact that the agreement on the surrender value ( surrender value table) was usually earlier handed once you have received the deed to the policyholder. Hence, often were the details of the agreed surrender values ​​, in particular their initially low in comparison to the contributions paid amount, not discussed in consultation with the facilitator in the application. Many policyholders were reading the deed not preserved carefully and used eg in Germany so that their then existing legal possibility to contradict if not satisfied the terms of the agreement within 14 days of this ( § 5a, Section 1 SG ), no. Since a buy-back in the early days of an aligned on a long term of contract is often particularly very disadvantageous, this widespread ignorance leads to concerns from a consumer protection point of view. Accordingly, it has now been determined in the SGA that all information about the contract, the contract-specific surrender values ​​are communicated to the policyholder before the contract. In consumer protection circuits, however, the adoption of the currently applicable EU law underlying is doubted that consumers are mature enough to judge insurance products themselves, because they have all the needed information about it. The EU's desire to be able to offer insurance products for the informed citizen without any regulation, they make the call for minimum regulations to the contrary eg surrender values ​​to be considered the "right to a lack of awareness ." Therefore, it was now determined not only in the SG that has to be informed before the conclusion of the surrender values ​​, but the surrender values ​​have been extensively regulated by prescribing strict statutory minimum values.

Judicial contract amendment for 1994-2001 signed contracts with non-transparent agreements to repurchase value

The Bundesgerichtshof ( BGH) has declared in 2001, the contractual agreements to repurchase values ​​of two insurers invalid. Reason was the lack of transparency of the Terms and Conditions (GTC), with which the cash surrender values ​​have been agreed. From the Conditions of the policyholder could not have enough remove the Nachteiligkeit of termination. Because of the similarity of Terms used by insurers that decision affects very many contracts of many insurers ( the end of the approval by the insurance conditions by the Authority) and the change have been completed following the judgment in 2001 between the reorganization of the Treaties in 1994. Extent, however, in individual cases, the proof of the lack of transparency can not be provided, the Terms and hence the recent surrender values ​​are still valid. The distinction made by the insurers for the contracts that period in accordance with § 172 VVG replacement of Conditions was declared invalid by the Supreme Court in 2005 also declared null and void, and it was about the process of replacement, not the new GTC itself. The Supreme Court has basically raised no objections to the amount of the cash surrender values ​​. But this are the affected contracts without effective agreement on the amount of the cash surrender values ​​and the Supreme Court has a default setting for Height for these cases made ​​. This runs approximately down to is that the "half" disadvantage from the termination at the expense of the insurer goes, but the other half remains with the policyholder. This confirms the Supreme Court basically the principle of the surrender value, although in the case of the absence of an effective agreement for this purpose is to mitigate this somewhat. A number of policyholders who have denounced the appropriate contracts before the verdict and get a surrender value after the declared terms of service, you can make additional claim claims against the insurer so far yet. From the ineffectiveness of the reference value of the Federal Supreme Court concluded that even the cancellation deduction would be ineffective.

Recent Developments

In the occupational retirement provision ( pension scheme ), after a first-instance judgment of the Labour Court and statements of a judge at the Federal Labour Court, the agreement initially low surrender values ​​also be problematic for the employer as the policyholder. The employer could also be liable without fault and thereafter the employee to compensation for the low Negotiated surrender values ​​, eg also be due to improper deductions, obliged. Any criminal offenses on the part of the employer to be seen by individual opinions.

The Federal Constitutional Court has expressed concerns about the principle of the surrender value in a 2006 decision to non-acceptance of a constitutional complaint and discussed in a refund of contributions. However, this decision was not made in the context of a procedure, ie without consultation of experts or interested parties, as it would appear with such complex issues.

It is likely due to a press note of the Federal Court assumes that the Federal Court will also explain the terms of the surrender value, which were used until 2008, to be ineffective. The Federal Court led on 28 January 2010 in News Release 19/10 of: "From the decision of the Federal Constitutional Court of 15 February 2006 ( VersR 2006, 489 ) could arise that a surrender value, which in the early years at zero or only little lies about it, is unconstitutional and therefore a substantive content control in accordance with § 307 paragraph 1 sentence 1 BGB does not stand up ( so now § 169 para 3 SG 2008). " to a decision, it did not come, because the sued insurance had the through payment by the policyholder demanded surrender value of a decision of the Supreme Court prevented.

In September 2013, the Federal Court strengthened with a judgment at surrender value of life insurance policies that were completed between 2001 and 2007 and again terminated, the rights of the insurer. According to the judgment, the life insurer for the affected contracts may continue to retain up to half of the paid insurance contributions. For these policies, the old calculation method under which the acquisition costs and fees of the insurance will be charged with the first contributions applies. Since 2008, these costs must be spread over the first five years of the term. The judgment raises, however, not the decision of the Higher Regional Court of Stuttgart from 2011 on. Consequently, several clauses of contracts between 2001-2007 are not allowed, so people concerned is entitled to a higher return value value of their life insurance than the amount paid.