Pension funds beat "managers' insurance policies" hands down when it comes to life insurance prices, according to a study conducted for TheMarker. This is another reason why it is better to invest in a pension fund as opposed to the insurance policies.
The study examined what it would cost for a man, insured as part of a pension fund or through an insurance policy for retirement savings, to buy NIS 100,000 in life insurance - and regardless of age, the pension fund always comes out cheaper.
The price gap is between 23 to 36 percent, depending on age, with the average being 29 percent cheaper. In fact, the pension fund is an even better deal since the comparison was made between the lowest cost insurance policy - for non-smoking men, while the pension fund charges an average price for all men. If the pension funds had separate smoking and non-smoking rates, the gap would have been even greater, probably in the 40-50 percent range.
The life insurance policy examined in the study is for death before retirement age. Such insurance is intended to allow survivors - dependents such as a widow and children - to be provided for after the principal breadwinner has passed away.
In addition to the price, in general, workers' usually buy larger life insurance policies from pension funds, or the pension funds provide larger insurance benefits.
The average person has insurance worth 50-70 monthly salaries through the insurance policies, whereas the pension funds provide insurance worth 70-100 monthly salaries on average, and sometimes even up to 200 salaries worth - twice as much in practice for pension funds than insurance policies.
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