Traditional management is the most common form of savings for retirement and is the default for many employers due to its simplicity as well as elements of guarantee. Simply put, it means that the insurance company takes care of all the management for you the customer in something that can be likened to a large investment fund. You are not able to make any changes and there are often special conditions associated with the savings.

Traditional management is generally an acceptable way to save if you do not have a great interest in savings and investments. Unit-linked insurance with incorrect risk and high fund fees is currently a common phenomenon and hurts many investors. The reason is that few people have the knowledge required to manage their own investment fund savings while advisors in banks and insurance companies often have incentives to sell mediocre products at high prices.

For traditional life insurance, the insurance company takes care of all management, which is a good starting point. The problem with traditional life insurance is that the risk is not tailored to you and your life cycle. Traditional life insurance management generally offers constant medium-risk management, which means that young people take too little risk and retired people too much – the result is low returns for the young and potentially undesirable fluctuations for the retired. Guarantees in a traditional insurance are also of limited value.

Advinans’ view is that unit-linked insurance is the best solution but it requires that the customers optimise their savings based on their life cycle and preferred risk – and ensure the right exposure at low fees.  Advinans’ automatic portfolio management for ISK and occupational pension as well as Advinans’ pension advisory service are a good basis for successful investment fund savings.

Read more about Advinans’ views on traditional life insurance management in Traditional life insurance or unit-linked insurance.