Retirement
A capital-forming insurance product in the third pension layer that pays a lifelong annuity or a lump sum in retirement. It offers certain tax features but often carries high costs.
Private pension insurance belongs to the third pension layer, the freely arranged private provision. It is a capital-forming insurance product: contributions are paid in over the years, out of which a lifelong annuity or, alternatively, a one-off lump sum arises in retirement.
Its defining feature is the lifelong payment, which covers the risk of outliving one's own capital. Added to that are certain tax features in the payout phase. These characteristics, however, come at a price.
As a rule, private pension insurance carries comparatively high costs, for example for acquisition and administration. Set against the low-cost approach of building a portfolio with ETFs, it therefore warrants careful scrutiny, particularly with regard to long-term return after costs. As of 2025, the trade-off between protection and cost remains the central question.
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