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Hungary: New Generation Unit-Linked Insurance Product to Meet Growing Demand for Single Premium Insurance


Citibank to be Exclusive Distributor of Product from Partner Aegon Hungary

Budapest – Total revenue of single premium insurance products in Hungary have tripled in the last two years, an increase from HUF 90 billion at the end of 2005 to HUF 239 billion at year-end 2007 based on statistics from the Association of Hungarian Insurance Companies, MABISZ. The majority of the insurance premium payments came from unit-linked products, a trend that clearly shows an increasing customer demand for these types of products that may also provide tax benefits to customers in addition to the investments and insurance. In response to this increasing customer demand, Citibank and Aegon Hungary Insurance Company have developed a new unit-linked insurance product called Multifund, that in addition to all benefits provided by such a unit-linked product, it offers unique investment opportunities for customers from many perspectives.*

Batara Sianturi, Citi Country Officer for Citibank Zrt., said: “Our strategy in shaping our product offer focuses on creating a wide selection of products similar to a ”financial supermarket,“ with the aim of offering a variety of deposit, credit, investment and insurance products at one place designed to meet our customers’ demand. We have started the distribution of the HUF-based unit-linked product last August, and based on the success of selling this product we have just enhanced our product range with the EUR-based and USD-based product. The USD product is unique on the market.”

“Compared to other unit-linked products available on the market in case of Multifund customers can select from funds of several onshore and offshore fund houses, a total of 94 mutual funds of seven fund houses, including equity, bond, real estate, money market, and other funds. The invested amount can be reallocated any time among the available funds in the specified currency. The reallocation is free of charge in many cases; furthermore it is free of interest withholding tax,” added Mr. Sianturi.

The unit-linked products, as a flexible combination of mutual funds and an insurance element, provide a modern long-term savings and investment possibility for the customers. Maturity payment after ten years and the scheduled maturity payment is free of interest withholding tax, and on particular conditions some tax allowance is also available.**

In the frame of the insurance protection, the Insurer guarantees repayment of the invested amount if the insured person dies, even if the investment’s performance is poor, while in case of good performance of the investment funds the actual value of the funds will be paid to inheritors together with their accrued proceeds (deducting in this case only the benefits previously paid out under the contracts). An additional advantage consists in the fact that the death benefit is inheritance tax free, and not part of the legacy, thus it is immediately available for the beneficiaries/inheritors.***

The minimal ticket size of the invested amount is HUF 3 million or, in compliance therewith, EUR 12,000 or USD 16,000. 24 HUF funds from four fund houses (Aegon, Budapest Alapkezelo, Credit Suisse and ING); 42 EUR funds from six fund houses (Aegon, Allianz, Blackrock, Credit Suisse, ING, Templeton); 28 USD funds from 5 fund houses (Allianz, Blackrock, Credit Suisse, ING, Templeton) are available.

Both partner companies strived at offering competitive favorably priced products to customers, while granting a transparent cost structure.


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