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Generali Wealth Accumulation and Security Plan

Insurance tip on the topic of wealth accumulation

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Generali Wealth Accumulation and Security Plan

DVAG (Deutsche Vermögensberatung AG) is one of the leading financial service providers in Germany and possibly even the largest. Since its founding in 1975, DVAG has continuously grown in importance and currently employs around 18,000 full-time advisors, according to its own figures, which almost gives it the reputation of a "sales army".

Generali fully utilizes this extensive network of advisors, as it maintains a close partnership with DVAG. In fact, Generali owns approximately 401,130 shares of DVAG, highlighting the close connection between the two companies. Consequently, DVAG acts as an insurance agent on behalf of Generali and its subsidiaries.

As an insurance agent, DVAG therefore acts exclusively as an intermediary for products offered by Generali or its subsidiaries. This means that customers' choices are limited to the product portfolio of this specific insurance company.

Comparison parameters

Duration	37 years
Monthly fee	€250/month
Product type	Unit-linked pension insurance – without guarantee
Pension guarantee period	Minimum value
dynamics	no dynamics
Process management	No
Additional insurance	No

Dynamics:

A contract without an indexation clause lacks flexibility. It is generally recommended to include an indexation component to offset the effects of inflation.

Additional insurance:

Our client did not include any of the available supplementary insurance policies in the contract. The rule is: combined contracts should be avoided. This makes the contract structure opaque and incomprehensible, and results in additional costs. One insurance policy covers a specific risk.

Guarantee and pension guarantee period:

For a client with such a long investment horizon, a guarantee is not strictly necessary. In fact, guarantees should ideally be omitted from annuity policies, as they can significantly reduce returns. The guaranteed annuity period, which stipulates how long an annuity will be paid (even after the policyholder's death), has been minimized in the Generali Wealth Accumulation and Security Plan, as the client prefers a deferred lump-sum payment.

Closing costs, so-called alpha costs

The closing costs are due at the time the contract is signed, and these typically cover the advisor's fees. These costs are calculated over the next five years based on the premiums paid. The closing costs for the Generali Wealth Accumulation and Security Plan amount to 2.5 times the total premiums paid over the valuation period. These costs are in line with standard market practice.

The valuation period or the valuation amount is calculated by multiplying the annual premium (€250 * 12 months = €3,000) by the number of years since the start of the contract. In our case, this is 37 years.

37-year valuation period * €3,000 annual premium = €111,000 invested capital. Of this, 2.5 % corresponds to €2,775 in closing costs.

Contribution-related costs, so-called beta costs

The beta costs are deducted from the contract every month or year after the premium payment. These costs are always a percentage of the premiums paid. Generali, with its "Wealth Accumulation and Security Plan" tariff, charges a hefty 22 % on the premium! That amounts to €55 per month or €660 per year for a €250 premium.

Policy value-related costs, so-called gamma costs

Gamma costs typically represent the most significant component, as they account for the highest costs over the plan's term. However, there's a crucial point to note: the Generali Wealth Accumulation and Security Plan charges 2,% annually on the capital! In comparison, similar providers charge only one-tenth of these gamma costs.

Unit costs, so-called capacitive costs

Unit costs, also known as capacitive costs, are fixed costs that are identical for every contract. Regardless of whether €50 or €400 is saved monthly, the same capacitive costs generally apply to every contract. This type of cost is relatively rare, and the Generali Wealth Accumulation and Security Plan waives this cost factor.

Costs of investing in the Generali fund and wealth accumulation plan

DVAG primarily brokers DWS funds, which makes sense given their long-standing business partnership. In our case, the DWS Vermögensmandant Dynamik fund was selected.

This fund incurs costs of 1.82% (excluding transaction costs), which means that only a small portion of the return remains with the client.

Combined contract

The wealth accumulation and security plan is not simply a retirement savings contract, but also includes disability insurance and, in some cases, term life insurance. Although this may seem advantageous at first glance, as it appears to cover multiple needs at once, the reality is often more complex. Such a structure leads to additional cost opacity and relies on mixed costing.

It is difficult for a provider to offer the best products in different areas. Often, an insurer is particularly strong in one sector, while potentially incurring losses in others. To offset these losses, higher premiums are frequently charged in other areas where more premiums are paid in than benefits are paid out.

Therefore, it is advisable not to take out all insurance policies with a single provider, even if "discounts" are tempting.

How does the invested capital develop in the Generali wealth accumulation and security plan?

The good news is that, due to the long investment period, the €111,000 invested (12 months * €250 * 37 years) will not be lost. However, this is only just the case. In comparison, similar products cost only a fraction of this annuity. The total cost of this contract over its term amounts to €87,305.92! This is money that will be missing from retirement savings.

Conclusion on the Generali fund-linked retirement savings and security plan

In summary, the Generali wealth accumulation and security plan pension insurance, in its current configuration, leaves significant potential untapped. Our extrapolation using a comparable product from the same market segment illustrates this point. This comparable product is a so-called net policy, meaning no commission fees are charged; instead, a fee is paid to the advisor. This approach allows the investor to save considerable costs and maintain full transparency and control over expenses at all times.

What you should do now

If you have a contract with Generali in the form of a wealth accumulation and security plan, please feel free to contact us – we will analyze the costs of your contract using financial mathematics and explore potential optimization options. We work commission-free, as this is the only way we can provide you with the added value shown above.

Generali wealth accumulation and security plan cancellation

Alternatively, you can also consider cancelling your Generali wealth accumulation and security plan if you already know that your contract is not profitable or that there are significantly better providers.

You can generally cancel your contract with Generali very easily. A simple two-line letter is sufficient ("Dear Sir or Madam, I hereby cancel my Generali wealth accumulation and security plan at the earliest possible date.").

The cancellation will take effect next month. For example, if you cancel in August, the contract will be terminated in September. You should receive your payout within four weeks.

The following information must be included in the termination notice:

Name, address & recipient – Example: Max Mustermann, Musterstraße 12, 22459 Hamburg, Generali
Insurance policy number (you can find it on every letter relating to your contract)
IBAN, where the capital should be transferred
Insurance policy (if you no longer have this, you can request a new policy from Generali. A fee of €30–50 is usually deducted from the capital for this).
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