Dynamics (insurance)

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In the insurance sector , dynamic or dynamic increase refers to the contractually agreed regular - mostly annual - increase in the contributions and benefits of an insurance contract . The aim is to adapt the scope of the contract to the assumed change in demand during the term of the contract. In accordance with the agreement, the increase is carried out either with a fixed factor or according to an index that largely corresponds to the expected change in demand. The reason for the contractual agreement in advance is, on the one hand, a mutual simplification, since the contract adjustments do not have to be newly agreed by the parties. In addition, there are often additional advantages, e.g. B. the validity of the originally agreed conditions can also be extended to the increases, so that any tariff increases occurring in the meantime or in life insurance due to deteriorated health, as would have to be taken into account in the case of increases agreed later, have no effect. In terms of taxation, increases agreed upon directly at the time the contract is concluded are considered part of the original contract, so that the increases are treated in the same way as the basic contract for tax purposes. Insofar as previous advantageous regulations still apply to existing contracts within the framework of the changed tax advantages for life insurance policies, the right to future dynamic increases can mean a tax advantage. On the other hand, even with dynamic increases, there is the risk that the contract will not develop in line with demand or that the dynamic increases will take place on conditions that are not competitive or are too heavily burdened with surcharges.

The dynamic differs from a contract with an increase agreement in that the increase is not irrevocably agreed, but the policyholder has the opportunity to object to the individual increase. However, such contradictions are usually not unlimited. Depending on the contract, several contradictions in a row can lead to the exclusion of further dynamic increases.

Depending on the type of insurance (e.g. property or personal insurance), Dynamic is offered in different forms. The following is used as a distinguishing criterion:

  • Dynamic type : contribution or service dynamic
    • With the benefit dynamics, the increase is calculated based on the insured benefit (e.g. sum insured). With a 5% dynamic, for example, the sum insured for a life insurance is increased from 100,000 euros to 105,000 euros. The associated increase in the premium, determined on the contractual basis for calculating contributions and benefits, will normally be higher than 5% in life insurance.
    • With the premium dynamic, the premium is increased by, for example, 5% from 100 euros per month to 105 euros per month. The associated increase in the insured benefit, determined on the contractual basis for calculating contributions and benefits, will normally be less than 5% in life insurance.
  • Dynamic Range : Full or dynamics
    • With full dynamics, the total premium or all parts of the insurance contract are increased.
    • In the case of partial dynamics, only the contributions for individual partial benefits or these partial benefits are increased, for example only the benefit in the event of survival or only the benefit in the event of death.
  • Scale of increase : The scale of increase can be set as a fixed factor or as an index, e.g. B. 5% annually or another, clearly verifiable quantity (e.g. the increase in the contribution assessment limit of the statutory pension insurance , annual income of the insured person, construction price index, etc.)

In general, insurers and policyholders are free to design the dynamic of the contract ( freedom of contract ), so that in practice there are very different varieties. With most insurances, the insurer also accepts the inclusion of a dynamic in an existing insurance contract retrospectively (if the insurer also offered a dynamic for this contract when it was concluded). However, in the event of subsequent inclusion, there is usually a new risk assessment.