Around 25,000 private long-term care insurance policies are taken out each year. A shop keeper, according to the Chamber of Labor (AK). This is offset by several million life insurance policies.
premiums disproportionately high
“Private long-term care insurance has only existed for ten to 15 years,” says Christian Prantner, an expert in financial services at AK Vienna. According to the insurance association, around 25,000 contracts were signed in 2020. In the life insurance segment, on the other hand, millions of contracts are concluded every year – in Austria alone, according to the insurance expert.
Prantner describes the advertising narrative of the insurers as follows: “Fewer and fewer state funds would be available for more and more people in need of care.” That is an unproven assertion, according to Prantner. The insurance companies would promise their customers a doubling or tripling of the state care allowance. However, the premium to be paid for this is disproportionately high.
Benefit only from care level three
But there is another serious problem: Most insurers only pay from care level three. The Uniqa insurance only from care level four. If someone needs care and gets level one or two, the insurance pays nothing. And that despite the fact that two-thirds of the statutory care allowance recipients are classified as one, two or three.
According to Christian Prantner, private long-term care insurance is nothing more than risk insurance. “The risk is that I pay expensive premiums for many, many years, but in the end there is no need for care, or a level of care is reached that does not provide for any benefits from the insurer.” According to the financial expert, these two pitfalls exist.
Long-term care insurance is also expensive. Prantner cites the last AK study on the subject from 2018. At that time, 30-year-old customers would have had to pay a monthly premium of 26 to 50 euros. At the age of 70 it was already 200 to 275 euros. “These are not trivial amounts. Considerable premium volumes are being moved there,” says the insurance expert.
Life insurance is not an alternative
So how else can you make good provisions for old age? “Not by taking out life insurance,” says Prantner. Anyone who takes out life insurance instead of long-term care insurance will go from bad to worse.
The interest rates that the insurers achieve with the premiums are negligible. There would no longer be a guaranteed interest rate for classic life insurance. This is zero percent. The guaranteed benefits of a life insurance are therefore often well below the premium amount.
As an example, the financial expert cites life insurance for which a customer pays 100 euros a month. The cost share in such a case is ten to 15 percent. Only 85 to 90 percent of the premium is actually invested in interest-bearing investments. According to Prantner, ten to 15 euros are spent on other costs and taxes. If the insurance contract runs very short, life insurance threatens to become a loss-making business in many cases. Prantner describes the case of a consumer who paid in 40,000 euros and only got 37,000 euros after ten years.
Capital savings accounts and home savers
Instead, the financial expert recommends periodically putting money aside yourself. On savings accounts or capital savings accounts with a fixed interest rate and a term of five to eight years. Alternatively, you can also conclude a building loan contract. Since 2005 also with the purpose of dedication “Care”. The savings can be used for care costs as well as for renovations in the house or apartment.
“If I put money aside, with deposit insurance, my capital is preserved in any case. It’s not gone then,” says Prantner. Just like it can happen with private long-term care insurance. “Even if I don’t need care, I keep all the money in my savings book or savings account,” says the financial expert.
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