Join a share: how an HOA works and what it is
From 2025, a new product that will combine insurance and investment will appear in Russia - shared life insurance (SLI). Izvestia found out what its features and advantages are, who this instrument is suitable for, how to use it correctly and what pitfalls this insurance product has.
What it is
On January 1, 2025, Russia will start selling shared life insurance policies (SLI).
- PSL is a type of long-term life insurance. It includes two components: investment and insurance. As a general rule, the former accounts for 99.9% (client's assets), while the latter accounts for 0.1% (insurance). Under a LLI, the policyholder is protected in the event of: surviving to a specific term, age or event, as well as the death of the insured. A part of the premium under the FLS is placed in units in mutual funds," explains Alena Talash, founder and managing partner of RosCo Group of Companies.
Thus, the instrument combines life protection and the opportunity to earn money on investments. Part of the money you pay for the policy is used to buy shares in various financial assets, such as stocks and bonds. This gives you a chance to get a return on investment, adds Ksenia Igumnova, financial product expert at VseZaymyOnline.
Features of DSL
Manages assets under the contract of DSL management or insurance company, licensed by the Bank of Russia. The management company or insurer decides which shares and other instruments to purchase within a particular fund, and which to sell. The client decides on the purchase or sale of units of mutual funds under a DSH contract. And the insurer determines in what proportions to hold mutual funds, points out Alena Talash.
The market already has such insurance instruments as investment (ISJ) and accumulative (NSJ) life insurance So, if in ISJ profit goes to savings or payments, and in NSJ is usually paid a fixed amount at the end of the term, in the share insurance client receives a share in the profits from investments.
- The policyholder in a HSA, as in a HML, can use ready-made investment strategies depending on his/her risk profile. At the same time, he/she can independently choose suitable mutual funds. This is beneficial if the investor has an understanding of how stock market instruments work, - emphasizes Alena Talash.
There is also a tax deduction in Mutual Funds. From the contributions paid by an individual up to 400 thousand rubles per year, it can be up to 52 thousand rubles for programs with a term of 5 years. The instrument also provides protection of funds from seizure and confiscation by court order and from division at divorce.
There are risks
At the same time, market participants draw attention to the fact that the housing and housing association is not a risk-free instrument. As in any investment, there is a classical rule: the results of investment in the past do not determine income in the future, notes Yaroslav Korolev, an insurance broker.
The value of investment units may rise or fall, and as a result the payout to the policy holder may be less than the amount of premiums, i.e. the insured's income directly depends on the current value of assets on the Russian stock market.
Thus, the advantages of the DCF include the opportunity to earn on investments and insurance protection.
This product is suitable for those who are ready to invest for a long term (from 5 years and more) and want to combine insurance with income from assets. To maximize profits, it is important to choose a reliable company, assess the risks and make regular contributions, recommends Alena Talash.
- The policyholder under the DSL, as well as under the HML, can use both ready-made investment strategies and independently choose suitable mutual funds. Other advantages of the DSL: exemption from personal income tax on risk payments and investment income below the key rate, protection from claims on investment income from third parties, the ability to receive a social tax deduction and transfer capital to heirs address, the expert lists.
Lack of protection
Thus, the DCF can be seen as a useful tool for policyholders with investment experience. It is suitable for long-term accumulation and obtaining insurance protection.
The main pitfall of DSL is the lack of guarantee of protection of funds. Thus, the HIS policy assumes 100% protection of the insured's capital. The insurer acts as a guarantor. The insurer invests part of the funds in bonds and other stock market instruments with fixed returns. In equity insurance, choosing an unsuitable investment strategy may result in loss of capital. The risks of price fluctuations of mutual funds on the stock market are borne by the client, emphasizes Alena Talash.
- Mutual funds are a new instrument for Russian private investors with a certain experience and level of qualification, who are ready for independent investment. As in investment life insurance (ILI), part of the insurance premium is invested in assets chosen by the client. However, the potential investment income together with the risk of loss is transferred from the insurance company to the policyholder," explains Oleg Kiselev, CEO of Renaissance Life Insurance Company.
Russian President Vladimir Putin, speaking at the VTB forum "Russia Calling!", pointed out the need to prepare and adopt laws on tax incentives for citizens in the framework of equity life insurance in the near future. According to him, it is necessary to guarantee the return of these funds, to provide for their state insurance in the amount of 2.8 million rubles. And, in addition, to offer tax incentives, primarily tax deductions for the amounts contributed.
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