Life insurance in Bulgaria is experiencing impressive growth, with the main driver being unit-linked life insurance policies. The reasons for this include the changed investment environment, the search for better alternatives to savings, and the pandemic, which made people realise how vulnerable they are and seek insurance protection. The gradually improving insurance culture also plays a role, to which the Association of Bulgarian Insurers (ABZ) has made a significant contribution.
The development and potential of life insurance, the benefits of unit-linked policies for consumers, and the mechanisms for managing client investments were among the topics discussed during the "Life Insurance: Protection and Investment" event, organised by ABZ and Bulgaria ON AIR on 10 April 2022.
"In developed markets, life insurance has a leading position. In Europe, it accounts for around 56% of total premium income. The difference with Bulgaria is notable — here, general insurance accounts for over 80%." – said Vladimir Savov, Deputy Chair of the Financial Supervision Commission (FSC).
However, there is a clear positive trend: in 2021, the life insurance share reached 19% of the market, up from 15% the previous year. Premium income grew at a much higher rate than general insurance — 38% year-on-year, reaching BGN 607 million.
The main growth driver has been unit-linked life insurance, which rose by nearly 140% year-on-year in 2021. The growing interest stems from the balance these products offer between long-term investment returns and insurance protection. This type of hybrid product has been present in the Bulgarian market for about a decade.
"In Europe, the ratio between unit-linked and traditional life insurance is 40%. We are approaching that level as well." – explained Svetla Nestorova, CEO and Chair of the Management Board of Bulstrad Life Vienna Insurance Group Plc. "This is due to the many benefits that unit-linked policies offer consumers," she added. "One particularly attractive advantage is that small individual investors gain access to international financial markets under preferential terms, typically reserved for large institutional players like banks and pension funds. This is because insurers can negotiate favourable conditions and select high-quality investment funds – with long track records, professional management, volume, scale, and diversification."
The leading advantage of these products is the insurance protection they provide alongside the investment. In addition to basic risk coverage such as death or permanent disability due to accident or illness, many attractive add-ons are available. For example, the sum insured for "accident" can be significantly increased, and critical illnesses can also be covered. Thus, the policy provides risk protection throughout its term, and at maturity, the client receives the invested premiums plus return.
Participants in the discussion also pointed out other benefits. Policyholders are eligible for tax relief — they can reduce their taxable income by up to 10% with the value of paid premiums. Another little-known but important feature is that life insurance claims are non-seizable, meaning they cannot be frozen by enforcement authorities. This makes life insurance a secure method for leaving a financial legacy. Additionally, life insurance claims are guaranteed up to BGN 196,000 in the event of insurer insolvency — a feature not available in all EU countries.
"Another advantage is that no matter how many life insurance policies a person holds — two or more — they will receive compensation from each in case of a claim. This is unlike general insurance, where compensation is paid only once per event." – highlighted Veselin Angelov, ABZ Management Board Member and Executive Director of Allianz Bulgaria Plc.
Insurers are seeking innovative and flexible solutions to meet consumers’ individual needs, noted Veselin Angelov. Everyone can choose coverage tailored to their specific circumstances, and regarding the investment element — there are wide-ranging options, both for more risk-tolerant and for conservative investors.
"Unit-linked life insurance provides access to various financial instruments, allowing investment across geographies, markets, industries, and so on. In terms of diversification, this is one of the best solutions," said Ivaylo Peev, Managing Partner at Life Partners Bulgaria.
Ivaylo Peev emphasised that everyone can find “their” product, not just high-income or financially literate individuals. The products are structured in a very understandable way, detailed information is provided, and with consultant support, they are accessible to all. The key is to view them as long-term investments that bear fruit over time.
Yavor Achev, Country Manager for Amundi Bulgaria, described life insurance as a "magical product", as it helps investors control their emotions — a key factor in securing better long-term returns. This is thanks to one of their features: it is not beneficial to terminate the policy before at least five years, thus protecting clients from impulsive decisions driven by fear or greed.
A good example is the situation in early 2020, when markets collapsed very rapidly. Life insurance policyholders were among the few who continued investing at low prices and later profited when markets recovered. – explained Yavor Achev.
The use of equal monthly contributions is another characteristic of these products — a strategy that smooths market volatility and ensures better long-term returns. Of course, consumers may adjust their investment portfolios, but it is advisable to consult with their advisor beforehand.
Unit-linked life insurance is a heavily regulated product at both EU and national levels. In Bulgaria, all Solvency II requirements for product distribution apply, making these products among the safest and most regulation-compliant ways for investors to access financial markets.
"If you want to grow your savings, leave something to your loved ones, and also benefit from insurance protection, there is no safer and more reliable way than unit-linked life insurance." – concluded Svetla Nestorova.
Watch the full recording of the "Life Insurance: Protection and Investment" discussion!
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The "Life Insurance: Protection and Investment" discussion was organised by Bulgaria ON AIR and the Association of Bulgarian Insurers (ABZ). The event, initiated by ABZ, marked the anniversaries celebrating 140 years of insurance in Bulgaria and 30 years since the establishment of ABZ. It is part of the informational campaign “On Focus: Life Insurance.”
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