Unit-linked life policy (fondsgebundene Lebensversicherung)

Level 3 · Advanced

German termfondsgebundene Lebensversicherung

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A unit-linked life policy is an insurance contract whose savings value is linked to selected investment units. The policy adds insurance cover and contractual features around the funds, while the customer usually bears substantial market risk. Outcomes depend on fund performance, risk-cover charges, acquisition and administration costs, switching rules, tax treatment, and surrender timing.

The wrapper audit

Separate the offer into four layers:

Layer	Evidence to request
Insurance	Insured event, benefit, exclusions, and cost of cover
Investment	Funds, allocation, guarantees, and who bears losses
Wrapper	Acquisition, administration, switching, and advice costs
Exit	Surrender values, paid-up values, penalties, and transfer limits by year

EU rules require disclosure of underlying units and assets plus surrender and paid-up values [1]. EIOPA’s 2026 analysis found substantial cost variation across unit-linked products and providers [2].

Worked comparison

A policy projects €100,000 after 20 years. The projection assumes a return before some costs and offers death cover.

The projection alone cannot be compared with a fund account. Rebuild both paths using the same gross-return assumption, cash contributions, insurance benefit, taxes, total costs, and exit date. Stress an early exit because long planned horizons often change.

ConceptMeta links to the deep article for German contract mechanics.

Check yourself

Who usually bears substantial market risk in a unit-linked policy without a full guarantee?

The policyholderThe fund market cannot affect the policy

How should a policy projection be compared with a fund account?

Use the same gross return, contributions, cover, taxes, costs, and exit dateCompare the two headline maturity numbers only

Which layers belong in a wrapper audit? Select all that apply.

Insurance benefit and risk-cover costUnderlying funds and guaranteesAcquisition, administration, and surrender termsOnly past fund return

Why test surrender after five years when the planned term is 20 years?

Life plans change and early costs may dominate the realised outcomeThe maturity value is paid after five years

Sources

1. EIOPA — Solvency II information for policyholders, https://www.eiopa.europa.eu/rulebook/solvency-ii-single-rulebook/article-2272_en (accessed 2026)
2. EIOPA — Costs and performance of insurance-based investment products, https://www.eiopa.europa.eu/eiopa-report-shows-overall-positive-net-returns-although-wide-variation-amongst-products-underscores-2026-04-01_en (2026)