Life Insurance (Lebensversicherung)
Life insurance is the insurance line that ties financial benefits to the death, survival, or other biometric events of the insured, encompassing both risk protection and retirement provision.
Comparison profile
- Trigger
- Fixed sum insured
- Insured interest
- The biometric risk of the insured person's death, survival to a defined date, or disability, and the resulting economic interest of dependants, creditors, or the policyholder in a lump sum or income stream.
- Rating basis
- Age at inception, Sum insured or contribution amount, Health declaration or medical underwriting, Smoker status, Premium payment term
- Typical limits
- Sum insured or accumulated capital is freely chosen by the policyholder at inception, ranging from modest amounts to several million CHF/EUR, subject to insurer and reinsurance underwriting limits.
- Target segments
- Private individuals, Families, High-net-worth individuals, Employers (key person and pension backing)
Insured events
- Death during the contract term
- Survival to the maturity date or agreed age
- Disability (where combined with a rider)
- Reaching a defined annuitization date
Key exclusions
- Suicide within the initial contract period
- War and warlike events
- Material misrepresentation in the health declaration
- Death caused intentionally by the beneficiary
- Participation in undeclared high-risk sports or aviation
Concept
Life insurance is the insurance line that ties benefits to biometric events in the life of the insured – particularly death or reaching a certain age or defined point in time (survival). It serves both to protect survivors against the financial consequences of premature death and to systematically build retirement savings capital.
Basic Types
Fundamental product types include term life insurance (pure death benefit protection without a savings component), whole life / endowment insurance (a combination of death benefit protection and a guaranteed capital payout), unit-linked life insurance (investment in mutual funds without a guaranteed return), and annuity policies, which provide for a lifetime annuity payment instead of a lump-sum payout.
Fundamental Actuarial Principles
The calculation of life insurance products is based on the actuarial equivalence principle, under which the present value of expected premium payments equals the present value of expected insurance benefits; the central actuarial assumptions here are the mortality table, the technical interest rate, and calculated expense and lapse assumptions.
Comparison and delineation
As the umbrella line of business, life insurance is delineated internally by its basic types – term life (pure risk protection), whole life/endowment and unit-linked insurance (capital accumulation with or without guarantees), and annuity insurance (longevity protection) – which are largely substitutes for one another depending on the policyholder’s need for protection versus savings. Externally, life insurance is distinguished from health and disability insurance, which respond to illness-related cost or income-loss events rather than to the biometric events of death or survival, and from occupational pension backing arrangements, which use life insurance as a financing vehicle for a separate employment-law obligation.