The Austrian Financial Market Authority (FMA) published a new edition of its consumer information series “Let’s talk about money”, titled “A life insurance policy is not a savings account”, highlighting that life insurance products combine a savings element with coverage of mortality risk. The note explains that part of the premium funds the mortality cover, while the savings component varies by product type. For classic life insurance, insurers invest savings premiums (for example in bonds, shares or real estate) and any profit participation is variable and cannot be guaranteed in advance; the FMA points out that the maximum permitted guaranteed interest rate has been zero since 2022. For fund-based and index-linked policies, returns can fluctuate with market or index performance, and insurers must provide standardised information documents covering product type, risks, costs, and potential gains and losses. The FMA also warns that early redemption often results in financial disadvantages because surrender values are typically significantly below premiums paid, and notes that making a policy non-contributory may be preferable to surrendering. The publication is available online alongside other editions of the series, with further information on life insurance products on the FMA website.
Austria Financial Market Authority 2025-04-01
Austrian Financial Market Authority publishes consumer guidance warning life insurance is not a savings account
The Austrian Financial Market Authority (FMA) released a new edition of its consumer information series, emphasizing that life insurance policies are not equivalent to savings accounts. It clarifies that life insurance combines savings with mortality risk coverage, with variable returns and no guaranteed interest rate since 2022. It also warns of financial disadvantages from early redemption and advises that making a policy non-contributory may be preferable.