The segment of educational annuity-type life insurance is gaining popularity in insurers' portfolios, accounting for over 10% in overall contracts sealed in 2006.
"At the level of the insurance market, this segment has a high potential and we expect it to witness steady growth," believes Bram Boon, general manager with ING Asigurari de Viata.
In 2006, the two types of educational annuity policies from ING Asigurari de Viata, traditional and unit-linked, accounted for 22.6% of the overall policies sealed by the company.
The minimum annual premium for the traditional type stands at 550 RON, while the premium for the unit-linked type amounts to 600 RON. Launched 10 years ago, this type of insurance allowed some ING beneficiaries to cash in annuities valued as high as 16,000 RON per annum.
"From our own experience, we can tell you this type of insurance has registered growth, but not by high percentages," stated Andreea Hreapca, marketing manager with Interamerican Romania. Interamerican's educational annuity policy was launched in 2001 under the name of "Comoara Ta" (Your Treasure) and generated revenues worth 705,055 euros last year.
The Interamerican policy is a life insurance policy that parents can offer their children who came of age, in form of educational annuity. With this type of policy, Interamerican targets individuals aged between 28 and 45, with incomes above 200 euros, high school and university graduates and city residents. The company offers 3 packages for this type of insurance: Standard, Optim and Extins.
In 1999, AIG Life launched a similar product for the insurance of children called Junior Extra, offering a guaranteed benefit at the time the child comes of age, plus the surplus interest existing at the respective moment, which is dependent on investment returns.
"Junior Extra policies make up 20% of AIG Life's individual insurance portfolio amounting to around 250,000, while the annual growth for Junior Extra stands at 25%," said Theodor Alexandrescu, general manager with AIG Life. For an annual premium of 1,059 RON for a one-year old child over a period of 20 years, AIG Life offers the beneficiary around 38,000 RON at the age of 21, with a yield of 7% per annum.
Amid Romanian clients' rising interest in signing an education annuity-type insurance contract, around 10% of policies sealed by Grawe Romania are of this type.
In the case of Junior Gaudeamus of Omniasig Life, a child can benefit from 30,000 RON when he or she turns 20 if his or her parents aged 31 seal the policy when the child is aged 2, thus paying a quarterly premium of 150 RON. Launched in 2002, the Gaudeamus insurance of Ardaf brought revenues worth 8,219 RON in 2006, with the company registering one of the lowest levels in overall insurance policies compared with the rest of major insurers offering this policy.
Educational annuity
Allows for the saving of funds needed for children's tuition
Covers the risk of the insured person's death, being a policy with double protection
The beneficiary of the policy is the child
The education annuity can be cashed in its entirety or partially over several years
It is generally sealed for children aged between 0 and 17
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