What is a guaranteed investment income and how is it formed?

INVESTMENT INCOME (annual rate of investment income) is used to calculate insurance rates under the Insurance Policy and cannot exceed 4% per annum.

According to the Law of Ukraine “On Insurance”, an insurance company provides its clients with a guaranteed investment income of 4% per annum in foreign currency and additional investment income received from the placement of life insurance reserves.

The relatively low percentage of guaranteed income , the maximum amount of which is limited by law, is due to the guarantee of long-term reliability and safety of the insurer’s assets, in which insurance reserve funds can be placed. The list of such assets is strictly regulated by law (Article 31 of the Law of Ukraine “On Insurance”).

In the accounting system of insurance companies, the category of investment income includes current income (interest, dividends, etc.) from portfolio securities, which differs from the increase or loss of capital in connection with the actual sale of securities, as well as an increase or decrease in value securities in hand.