New Regulation On Unit-Linked Life Insurance In Hungary

Policyholders of unit-linked life insurance products pay an agreed sum for the unit-linked insurance to the insurance company, as a regular premium, or in one lump sum. These payments cover the life insurance component as well as the investment, administrative costs, contracting fee and the commissions. The "total cost charged" ("TCC") is an indicator – calculated in line with the rules of Hungarian insurance regulations – showing all costs charged on life insurance policies having a savings element, reflected as a percentage value. The regulation of the TCC in Hungary has been amended effective 1 January 2017.

Up until now, insurance companies could charge most fees in the early years of the lifespan of an insurance policy. Therefore, an insurance company had little interest in maintaining an insurance policy, since they had already profited significantly during the first years. The latest amendment to the Hungarian insurance act sets a limit to the minimum amount