Investment in Insurance

Investments, investments… Anyone who comes into possession of a certain amount of money eventually asks how not only to preserve it but also to grow it. At this point, an ordinary person becomes an investor and begins exploring options to find the most suitable one. Ideally, of course, risks should be minimal and returns as high as possible.

When it comes to real estate investment, things are relatively clear: you purchase one or more properties to rent out or resell. The larger the investment, the higher the potential profit. Risks are relatively low, since the property remains in the investor’s ownership even if it does not generate the expected return. The main limitation is the required capital—high-quality real estate is not cheap.

Another common option is placing money in a bank deposit. Strictly speaking, this is not really an investment. In Thailand, interest rates are around 3% per year, which barely offsets inflation (approximately 2.3% in the previous year). Additionally, funds are locked for the deposit term, and there are no additional benefits.

It is often said that there is no perfect investment option. There are always trade-offs: high entry thresholds, elevated risks, low returns, or overly complex instruments suitable only for experienced investors. So what can offer a balance of profitability, reasonable risk, and practical benefits?

Let’s consider a financial instrument widely used in the West, popular in Southeast Asia, but still relatively unknown in CIS countries—investment in life insurance.

What makes it interesting?

Despite its somewhat intimidating name, it is actually quite simple and understandable
Accessible for both small and larger investment amounts
Capable of generating returns even during stock market fluctuations
Allows you to project returns with high certainty over 5, 10, or even 20 years

How Investment-Linked Insurance Works

Investment-linked life insurance is a hybrid of traditional life insurance and investment in financial instruments. Part of the portfolio is allocated to potentially profitable assets.

In essence, it combines two elements:
life insurance + investment

Traditional life insurance can be viewed as a kind of “bet” with the insurance company:

You pay premiums
If the insured event occurs, beneficiaries receive compensation
If not, the premiums remain with the insurer

With investment-linked insurance, the policyholder benefits in any case:

If the policyholder survives the term, they receive investment returns
If not, both the investment returns and insurance payout go to beneficiaries

Importantly, beneficiaries are designated in advance, so payouts are made directly without waiting for inheritance procedures.

Risk Minimization: Dollar Cost Averaging

This strategy involves investing a fixed amount regularly over time.

It is based on the idea that markets fluctuate in the short term but tend to grow in the long term. By investing equal amounts at regular intervals, investors reduce the risk of poor timing and achieve more stable returns.

Insurance companies commonly use this approach to manage investment risk.

Compound Interest

Investment-linked insurance relies on the principle of compound interest—where earned interest is added to the principal and generates further returns.

In practice:

Year 1: you earn interest on your initial investment
Year 2: you earn interest on both the initial investment and Year 1 interest
And so on

As a result, returns grow progressively over time, even if the interest rate remains unchanged.

Risk Diversification

Investors are offered several optimized investment options based on analysis of the Stock Exchange of Thailand, allowing diversification across different financial instruments.

Access to Funds

If necessary, investors can withdraw funds at any time and reinvest them later without penalties, limits on amounts, or restrictions on timing.