People in Latvia start to think about Life Insurance sooner, Lithuanians save most money

April 25, 2014

People in Latvia are likely to start thinking about various life insurance solutions and the ways in which money can be saved up in relation to such policies at an average of four to eight years earlier than is the case in the other Baltic States, the ERGO Insurance Company has found.  Analysis of the company’s data show that Lithuanians save up the most money via various insurance products, spending an average of two times more on individual insurance solutions annually than the people of Latvia and Estonia do.

Latvians begin to think about their own financial security and that of their families after they turn 30.  The most popular life insurance product in Latvia is private pension insurance, while in Lithuania and Estonia people prefer life insurance with accumulated savings in funds.  They most often choose such plans between the age of 34 and 38.  Study insurance is becoming more popular in all three Baltic States, making it the second most popular type of life insurance at this time.

“The rhythm of life determines the age at which people start to take care of their financial security and that of their families,” says ERGO Board member in Baltics Ingrīda Ķirse.  “These are products which are usually bought at an important time in a person’s life – establishing a family, purchasing a home, or having children.  In recent years, parents have increasingly been purchasing study insurance for their children, even when the kids are just two years old so as to save up money for studies and to ensure financial support if the breadwinner of the family should be lost.  This trend is facilitated by the fairly high cost of education, as well as by an ever-greater understanding of the fact that a high-quality education is a foundation for a secure future.”

According to ERGO data residents in the Baltic States make the greatest premiums in private pension insurance, with Lithuanians being at the head of the pack with an average sum of EUR 653 per year.  They are followed by Latvians with an average of EUR 600, with Estonians lagging behind with just EUR 549.

Big impact on higher interest from Lithuanians and Latvians have relatively recent reforms in II pillar pension systems. During reforms people received more information about possibilities to individually accumulate certain sum in private pension funds and many of them decided to conclude life insurance agreements.

Ķirse says that interest in life insurance is increasing in a stable way.  “That is down to the fact that this is a product with a high level of added value,” she argues.  “There are various types of riders such as accident insurance, but there is also a chance to save up guaranteed sums of money or to earn more by investing in funds.  It is also no secret that people can receive an income tax rebate from the state in relation to the sums that have been contributed.  This is a substantial additional stimulus in favour of such savings plans.”