Only approximately every third Latvian resident is certain that life insurance should be necessary for people with large debts. This means residents’ overall understanding of the concept of life insurance is low, as stated in the survey performed by ERGO, DNB Bank and SKDS, comparing results with average indexes in other European countries.
It was concluded in the survey that society’s overall understanding of life insurance does have a tendency to increase – Latvia’s life insurance segment had grown by 8% last year. This is still viewed as a low level and nowhere near the average level of developed European countries, where life insurance takes up nearly 70% of the market.
Among loan takers, 30% of DNB mortgage loan clients have life insurance.
«Compared with other European countries, where people usually insure their lives before insuring property, habits of Latvian residents remain characterized by short-term thinking. The lack of comprehension about the meaning of life insurance and responsibility before families is also reflected in SKDS survey. Respondents say life insurance should be mandatory for people working in dangerous professions and people who enjoy extreme sports. Statistics show that even people who are not engaged in dangerous activities often die too early. The risk of death is no something that applies only to people who have dangerous jobs or hobbies,» says Gints Konrads, ERGO Health and Life Insurance Department’s Director in Baltics.
Information compiled in the survey shows that 63% of men and 37% of women among loan takers use life insurance services. In nearly 30% of cases loan takers are aged 30 to 35. Every fifth loan taker is aged 35 to 40.
Average issued loan amount for which life insurance contract is signed has been EUR 30,000. In cases of home repairs, the amount is usually EUR 15,000 and EUR 70,000 in cases of procuring homes. Average monthly payments for life insurance are usually EUR 27 and the average length of insurance contracts is 17 years.
Since 2010, when ERGO and DNB Bank started offering loan clients life insurance, nearly 20 insurance claims have been paid for different accidents.
«Mortgage loan is not a spontaneous decision, but rather a carefully considered step. People make the decision to improve their quality of life and take on commitment with a bank that will last several years. This is why we urge residents to be responsible towards life insurance – if an accident occurs, all previously made family budget calculations and expectations will no longer have any meaning. There is also a wrong impression that life insurance is expensive. In reality, the average monthly insurance payment is EUR 27,» says Lauris Bojars, DNB Bank’s Savings and Insurance Product Category manager.
Survey results also reveal that, unfortunately, 25% of respondents have never considered the need for life insurance. Only 28% of respondents use life insurance services.