Unit-linked life insurance

Investment object means the units, stocks, bonds or other financial instruments of the fund in which the capital of the investment focus is invested.

Example
The iShares Core S&P 500 USD Acc fund units are an investment object.

Investment focus means a set of one or more investment objects selected by us with the aim of taking optimal investment risk in the target market.

Example
The investment focus ‘US Equity Index’ may be composed exclusively of units of the iShares Core S&P 500 USD Acc fund or of units of another fund with a similar strategy, or the corresponding investment focus may also be composed of 50% of units of the iShares Core S&P 500 USD Acc fund and 50% of units of another fund with a similar strategy.

Investment programme means a combination of a number of investment focuses, where the premiums received are invested according to the allocation between the different investment focuses in the investment programme. You can choose between investment programmes with different levels of risk.

Example
The ERGO 25 investment programme invests 75% of the premiums you pay in the Bond Investment Programme, 10% in the World Equity Index Investment Programme, 8% in the US Equity Index Investment Programme, and 7% in the European Equity Index Investment Programme.

Life insurance based on saving in funds is closely related to investments in financial markets – stocks and bonds. Financial markets are cyclical in nature and the value of investments may grow or decrease. The more stocks in the investment portfolio, the greater the fluctuations in the value of the investment.

Life insurance based on saving in funds usually requires long-term investment, where the chosen strategy should be consistent and stable over a long period of time, regardless of stock market fluctuations. Only when the policy is about to expire, is it advisable to gradually reduce the share of stocks in order to protect yourself from fluctuations in the value of the investment at the end of the insurance contract.

We have accumulated knowledge that can be useful when thinking about investments.

• The value of investment funds at the end of the policy is more important than during the validity of the policy.
• To guard against significant swings in the value of your investment at the end of the insurance period, it may be worthwhile to think about progressively reducing the percentage of shares and correspondingly raising the percentage of bonds in your investment in the final years before the insurance contract expires.
• If the policy is about to expire, and the value of the selected investment funds has decreased sharply, there is an opportunity to extend the policy in order to wait for the market to rise. The economy is cyclical and there will always be ups and downs, but unfortunately no one knows exactly how quickly these changes will occur.
• The decision to change an investment fund should not be made based on emotional considerations, looking only at the decrease in the value of investment funds, but by assessing one’s long-term risk tolerance, investment term and purpose.
• Regular contributions (e.g. monthly payments) are an excellent mechanism for mitigating the effects of a downturn in the market.
• It is important that the investment portfolio is sufficiently diversified and consists of several funds. The investment programmes offered by ERGO consist of several funds.

High quality of funds. In most cases, it is customary in the market to offer funds of one or a few fund managers, which objectively do not guarantee clients the choice of the best funds. ERGO selects only UCITS quality funds and the highest rated funds in different categories. We are looking for international funds and focus on the quality and attractiveness of the fund itself, not merely the provision of funds from a particular asset manager. The investment funds we offer have high-quality ratings from Morningstar (by the world’s leading fund analysts).

Low fund management costs. Considering the size of the entire investment portfolio of ERGO, we offer our clients institutional-class investment funds, which generally have very large minimum purchase volumes (in some cases even several million euros) and significantly lower fund management fees. This means that our clients have access to the same investment funds as large investors, and with lower fund management fees.

Index funds. The offering includes the five most popular stock index funds (e.g. S&P 500, Eurostoxx 600, MSCI World), which has very low fund management costs (from 0.07% per annum), compared to actively managed funds, where administrative costs can range from 1–2% per annum.

Simple choice. Four investment programmes make it easier for clients to choose funds. Each investment programme includes several funds that offer greater diversification. The investment programmes offered by ERGO represent different regions, different ratio of stocks to bonds, and different levels of market development.

Regular review of funds. The ERGO Investment Committee regularly monitors the quality indicators of the funds and, if necessary, can decide on the exclusion of funds from the list of funds offered by ERGO. The ERGO Investment Committee also monitors whether a particular investment fund is available at a lower cost to the fund manager.

We will pay out the savings reserve at the end of the insurance period.

In the event of the death of the principal insured, the amount of the insurance benefit depends on the choice of insurance chosen in the insurance contract (A or B) and the sum insured of the life insurance. If you have chosen option A in the insurance contract, we will pay out one of the two highest amounts in the event of the death of the principal insured: either the sum insured for life insurance or the value of the accumulation reserve. If you have chosen option B in the insurance contract, we will pay out both the sum insured of the life insurance and the value of the accumulation reserve in the event of the death of the principal insured.

In the event of the death of an additional insured, we will pay out the sum insured for the life insurance of that insured person.