Choices in life revolve around making decisions that lead to preserving one's existence.
In the chilly winter of 2025, the life insurance landscape underwent a drastic transformation. While life insurance savings policies (NSS) took a plunge, sales of investment life insurance policies (ILS) hit stratospheric heights, reaching six-year records. The root of this shift in the market? Customers' irresistible urge to snap up contracts during the high key interest rate period, along with insurers' aggressive sales tactics. The successor to these financial products, equity life insurance, however, remained on the backburner.
In the opening quarter of 2025, NSS premiums plummeted an astonishing threefold compared to the last quarter of 2024, slumping to 230 billion rubles. While this decline wasn't entirely unexpected, previous years only witnessed milder decreases compared to the last quarter. Stunningly, NSS policy sales in the third and fourth quarters of 2024 were two to four times greater than the annual sales figures of previous years. The culprit behind the NSS sales collapse, according to Tatiana Samsonova, a partner at B1, was the axing of tax incentives for the product effective from January 1, 2025. "Previously, a substantial portion of the investment income from life insurance contracts remained untaxed, making it an attractive choice over savings," she elaborated.
On the other hand, ILS policy sales kept marching forward, raking in 206 billion rubles, a ten percent increase from the previous quarter and a whopping fourfold jump from the previous year.
The boost in ILS sales can be traced back to two primary reasons: insurers aggressively pushing this product in response to the NSS slump and the imminent discontinuation of ILS sales in 2026. "There's no window of opportunity to buy ILS in 2026," Gleb Yakovlev, Vice-President of the All-Russian Union of Insurers, pointed out. The allure of ILS, according to Nikita Yevseenko, director of the "Insurance" department at Reksoft, lies in the sky-high key interest rate set by the Central Bank (21%), which has remained stable for several meetings. Experts believe that policyholders are rushing to invest before the interest rate tumbles, sparking a mad dash to invest before the 'last train' departs.
It's worth noting that insurers have taken a keen interest in Index-Linked Life Insurance (ILI) over traditional life insurance. Although unit-linked life insurance (ULL) sales have been sluggish, with only 43 thousand rubles in the first quarter of 2025, market participants are actively marketing ILI to generate more premiums from lucrative and accessible products. Premiums for ILI are tallied proportionately to the number of contract renewals, resulting in a steady expansion of premium collections while keeping the number of active contracts relatively constant. Currently, ILI for sums below 1.5 million rubles is rarely offered, notes Mr. Yakolev.
As for the slow launch of ULL policies, experts believe it's due to competition with conventional investment tools and an unclear advantage for the final investor. Against this backdrop, experts predict that the growing ILI collections will continue to surge by the end of 2025, with a possible slowdown in the third and fourth quarters if interest rates start dropping.
Insurers have also proposed introducing a more risky life insurance product with an investment component to the Central Bank. Potential modifications of ILI could involve raising requirements for policyholders, similar to the status of a qualified investor at brokers. This category is expected to attract higher premiums, starting at 10 million rubles.
In conclusion, while the market for life insurance continues to evolve, the latest trends suggest that index-linked life insurance is likely to follow the burgeoning popularity of investment life insurance. The top ten insurers in Russia accounted for an astonishing 93.6% of the total charges in the life insurance market, signaling a high level of market concentration. The surging interest in funded and investment life insurance products among Russian citizens, driven by economic factors like high interest rates and expanding offerings, paints a promising picture for the future of the life insurance sector.
In the dynamic world of business, personal finance plays a significant role, especially in the realm of investing. Amid the chilly winter of 2025, the surge in investment life insurance (ILS) sales can be attributed to the high key interest rate period and insurers' aggressive strategies.
Driven by the sky-high key interest rate of 21%, ILS sales reached stratospheric heights, raking in 206 billion rubles, showing a ten percent increase from the previous quarter and a whopping fourfold jump from the previous year.
