It is difficult to answer whether one should use reserves and savings contracts to bridge the current situation or, if the deferral requirement is met, make use of the legal options.
For many consumers, it is not yet possible to predict when your economic situation will return to normal due to the COVID-19 situation. You should replenish reserves soon in economically better times.
Make savings contracts free of contributions
Another option with which you can temporarily breathe air financially is the exemption from savings contracts. Under certain circumstances, this can also be several hundred euros. Here, too, talk to the respective providers about the possibilities. In particular, you should clarify the conditions under which it is possible to resume contracts to Corona without the contract conditions deteriorating.
The consumer advice center offers telephone advice for specific questions on the effects of the corona crisis on savings contracts. The employees there take up the concerns of the consumer and pass them on to an expert for feedback. You can also contact Davenport Finance. They have the personal loan opportunities designed while keeping in view the Covid-19
Life and pension insurance options
Some insurers currently offer their customers the payment of part of the current profit-sharing scheme to bridge liquidity bottlenecks. Of course, this can eliminate liquidity bottlenecks but has the disadvantage that these assets are lacking in old-age provision. In addition, caution is advised, especially with old contracts with good interest rates, such as 4 percent (on the savings portion). If you take out the saved surpluses prematurely, the insurer is no longer obliged to pay interest at the agreed guaranteed interest rate. This provides the insurer with relief since he has to pay less capital with the high guaranteed interest until the contract expires.
Exemption from the premium for a certain period, if possible in consultation with the insurer. After the deadline, the contribution payment must then be resumed. If the contribution remains the same, the benefit has been reduced accordingly. If the benefit is to be retained, it must be agreed with the insurance company that a correspondingly higher premium rate will also be paid after the premium exemption has expired.
- Cancellation: You will receive the surrender value and no longer have to pay contributions. It should always be carefully checked whether this is a sensible way. This is problematic, for example, if the contract is linked to occupational disability insurance that simply cannot be replaced. Maybe it is also a contract with advantageous tax regulations and low costs, then the termination should be considered due to a temporary bottleneck.
- Partial cancellation: You will receive part of the surrender value. This may be linked to a limited exemption from contributions. Then, after the deadline, increased contributions would have to be paid in order to regain full benefit when the deadline expires. It can also be agreed that the payment of contributions will continue, but will then be lower due to the reduced expiry payment.
- Loaning with interest: the insurer gives you a loan. Check what the borrowing rate is and compare it with offers from your bank. The advantage of this loan is the flexible repayment option. Furthermore, in an “emergency” the loan amount can also be repaid with the credit in the contract, with the consequence of the reduction in performance.
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