Co-founder of Affari Miei Independent Financial Advisory Company
19 September 2023
If you are looking for information regarding the Hybrid New Edition policy offered by Allianz, then you are on the right page because if you continue reading this article you will be able to have an overview of the advantages and disadvantages of the product, and finally you will also be able to read my opinions regarding the policy, so that you can then make a personal assessment to decide whether to subscribe to this product or not.
Allianz Hybrid New Edition combines the tranquility of a generally stable return, offered by the Vitariv Separate Management, with the opportunity to seek capital growth, thanks to the AllianzGI Best Equity Fund.
A similar product is a multi-branch insurance investment contract for which the customer obtains higher returns than those achievable with a classic Branch I policy, at the same time obtaining the benefits of separate management and insurance coverage to protect their loved ones in the event of death.
If you want to know more, all you have to do is continue reading!
This article talks about:
A few words about Allianz
Allianz SE is a European insurance and financial services company based in Munich, Germany, and has been present in Italy since 1 October 2007 under the name of Allianz SpA
It is one of the main Italian insurers, one of the world leaders in the insurance sector and asset management, with over 150 thousand employees serving more than 100 million customers in over 70 countries. Italy is the second largest insurance market for the group after Germany.
However, the solidity of the group does not go hand in hand with the convenience of the product: in fact it is necessary to carry out an analysis of the policy to see if it can be a good solution for you, it is not enough to rely only on the credit institution that offers it.
Is Allianz Hybrid New Edition safe? The risks of the policy
As with almost all products of this kind, the company is not able to guarantee 100% the success of the investment, so it is only a given that it will be able to return all the capital. You as an investor must be prepared to bear any capital losses.
In fact, multi-branch contracts, having within them the characteristics of unit-linked policies, are able to offer uncertain benefits because they are conditioned by market trends, so if the market goes badly you could lose as much as you invest.
From this investment you could obtain greater potential returns, but a greater return always corresponds to greater risk.
Characteristics of the contract
The contract invests 80% of your savings in Vitariv (Allianz’s separate management) and 20% in the AllianzGI Best Equity fund (a unit linked fund). Subsequently, a progressive capital reallocation mechanism towards internal funds is activated, until the chosen mix is reached.
It also provides 3 different options for your investment, which are:
Defender: protects the investment, and when the performance of the AllianzGI Best Equity fund exceeds 10%, the earnings are transferred to Vitariv. In the event of a loss of 20% or more, the value of the shares is automatically moved into a low-risk bond fund, to protect you from further declines;
Booster: optimizes the performance obtained by automatically reinvesting the return achieved by the Vitariv Separate Management in the AllianzGI Best Equity fund every year;
Capital into annuity option: after 5 years the policyholder can request the conversion of the surrender value or capital at maturity through an annual annuity.
Come funziona Hybrid New Edition
The benefits paid differ depending on the destination of the premium paid into the internal fund, in the separate management and finally, if it has been activated, in the death coverage (or death and permanent disability).
Let’s now analyze the different scenarios of the three performances:
Life case benefit: in the event of the insured’s life upon maturity, the payment to the beneficiaries designated by the policyholder is envisaged of a capital equal, for the part invested in the internal fund, to the equivalent value of the shares of the AllianzGI Best Equity internal fund, while for the part invested in the Separate management, to the capital accrued on January 1st preceding the expiry of the contract revalued until expiry;
Death benefit: in the event of the death of the insured, the payment to the beneficiaries indicated by the policyholder is envisaged of a capital equal to the value of the shares of the internal fund with increases depending on the age of the insured at the time of death. For the part intended for death coverage, if the death of the insured occurs during the coverage period and the capital of the benefit in the event of permanent disability has not already been paid, the insured capital of the death coverage indicated in the proposal and in policy;
Benefit in case of permanent disability: if this coverage has been activated and the age of the insured at the commencement is less than 41 years, Allianz will pay the insured the amount indicated in the policy.
Persons who, at the effective date, have a computable age of less than 18 years and more than 85 years are not insurable.
Award
The contract provides for the payment of a unique prize to be paid upon subscription. The minimum amount is 10,000 euros, the maximum amount is 500,000 euros. 80% of the premium paid is invested in the VITARIV separate management and 20% in the internal AllianzGI Best Equity Fund.
A part of the premium paid is also intended for death coverage (or death and permanent disability).
Duration
The contract has a fixed duration of 20 years and there is no possibility of suspending the guarantees.
The ransom
If you decide not to keep the contract until its natural expiry or the event occurs, but you want to redeem it earlier, you can only do so under certain conditions.
You can exercise the redemption when it has elapsed at least 1 year from the start of the contract, while for the part intended for death coverage you cannot exercise the redemption.
The total redemption is obtained by adding the value of the shares of the internal funds assigned to the contract and the capital accrued in the separate management on 1 January immediately preceding the date of the redemption request.
However, redeeming will cost you money penalties, which will reduce the amount of the sum that will be paid to you.
The penalty percentage is 3% if you disinvest after 1 year, 2% if you disinvest after 2 years, 1% if you do so after 3 years and 0% if you request redemption from the beginning of the year onwards.
If the redemption is exercised in a period that does not coincide with the 10th or 15th year that has elapsed entirely from the effective date of the contract, an additional redemption cost of 1.5% is applied to the capital accrued in the separate management.
The contractor can exercise partial redemption from internal funds or from the separate management with the same methods as for total redemption, specifying the amount of capital he intends to redeem from the internal funds and that which he intends to redeem from the separate management.
Who is the product aimed at?
It is aimed at those who seek medium or medium/high returns and who plan to hold the investment for at least 10 years.
It is intended for investors with a low to medium/low risk appetite, a moderate ability to bear any losses and adequate financial knowledge and experience (corresponding to an intermediate level on a three-level scale).
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The costs of the policy
Here we have arrived at one of the most important parts of our discussion, namely the costs that will inevitably impact your investment.
In this policy, issuing costs are not foreseen, but the loadings on the premium, equal to 3% of the total, and those withdrawn annually from the separate management and from the internal fund, reduce the amount of the final benefit.
Costs borne by the internal fund are counted as management costsand for the AZ Orizzonte 10 fund the commission is 1.50% while for the AllianzGI Best Equity fund the commission is 2.00%.
The following costs are also borne by each Internal Fund:
the charges due to the custodian bank for the task performed, such as the costs of administration and custody of the fund’s assets; costs associated with the acquisition and disposal of fund assets; the costs of auditing the fund’s accounts and reports, including the final liquidation report; legal and judicial costs incurred in the exclusive interest of the fund; – the tax charges pertaining to the fund.
I attach to you, by way of example, the scenarios that could occur for an investment of 10,000 euros.
The first switch is free, while for each subsequent switch you will have to pay 25 euros.
Tax advantages
Let’s finally see the rexchequerbut to which the Hybrid policy is subject.
The premium paid for this life insurance is not subject to any tax. Instead, the premium paid for death coverage (or death and permanent disability) gives the right to one tax deduction for IRPEF purposes in the amount of 19% of the premium itself, up to a maximum annual amount of 530 euros.
The sums owed by the Company under the contract, if paid in the event of the death of the Insured, are not subject to inheritance tax.
The stamp duty calculated annually will be withheld in total at the time of reimbursement of the investment.
Taxation on returns is instead subject to a variable rate between 12.5% and 26% based on the nature of the investments linked to the contract (government bonds, shares or other).
My Business Opinions
Now that we have reached the bottom of our review, I can draw conclusions and give you my opinion regarding the Allianz policy.
If you have already read other reviews, you will know that my opinion on insurance investments is not exactly positive. I don’t really like these products which are difficult to understand, with very high management costs and which in the end are not useful either for protection or even for investing.
I believe that if you want to insure yourself, therefore if you are looking for a pure risk product, then you can focus on policies such as temporary in case of death, that are useful for your purpose.
If, however, you want to invest, you can use many other financial instruments, which are less expensive and artificial and also where you can decide more freely about your investment.
In conclusion, now you can personally evaluate whether it is worth investing and subscribing to this type of product, or whether you prefer to focus on other instruments.
Conclusions
Now that you also know my opinions, you are free to choose as you prefer: perhaps you hope, by delegating the management of your money, to save yourself a lot of problems, but this comes at high costs.
If you want to learn how to invest and save in the most appropriate way based on your personal situation and your age, then read my practical guides for beginners: