Contractual Savings Institutions

These financial institutions receive funds under contract agreements, and then invest them on the stock markets. You will find pension funds and insurance companies in this group. There is cash flowing from pensions and insurance funds in this category, read full report.

These institutions are usually not affected by issues of liquidity. These institutions may invest in assets with a long term, such as bonds or stocks.

An example is a life insurance provider. To raise money, insurance companies offer insurance policies to protect against the loss of income due to early death or retirement. Benefits are paid to beneficiaries if the insured dies. Benefits are paid to the policyholder in retirement. Most policies also offer savings in addition to protection. It is possible to predict actuarially the life insurance industry’s fund flow, which is stable and predictable. These institutions are better able than others to invest in assets that have a higher return and a longer time horizon. The life insurance industry is governed by the state, and has less stringent regulations than other deposit types.

Accident insurance companies fall under the category of contractual institutions. Accident insurance companies sell coverage for property loss due to fires, accidents and thefts. The main revenue source for this company is the insurance premiums. The policies are designed to protect you against all risks. These policies do not offer any financial liquidity to the policyholders. The cash payouts on claims for insurance policies, as expected, aren’t predictable like those from life insurers. Both can be used for your personal financial needs.