With commitment and passion, 3Pace Development, a German startup founded in 2021, offers financial independence solutions which fit its customers’ needs. With AI-based withdrawal algorithms, the startup transforms annuity payments into a yield booster.
We have asked Johannes Kappler, Founder and CEO at 3Pace Development, to explain to us a bit more about withdrawal plans and how insurers can integrate AI-based withdrawal algorithms.
Withdrawal plans are not the easiest to understand for many users – why should we care about them?
Whether insurer or policy holders, the problem of historically low interest rates affects us all. From 2022, the guaranteed interest rate for new contracts in life insurance will even fall to 0.25%. Then, for example, possible annuity payments for pension insurance policies will become even less attractive. This requires new, creative solutions. With our withdrawal plans, we offer such a solution to escape the low-interest trap.
How do you create a win-win situation for both policy holders and insurers?
In the first step, I am thinking of private unit-linked pensions. Due to the unprofitable annuity payments, policyholders mainly take the money out of the contract at the beginning of the annuity phase, although originally saved for a pension! For insurers, this means losing the customer at exactly the time when the earning potential is at the highest level. I asked myself how to turn this situation into an advantage. Our solution is to integrate a risk adjusted withdrawal plan into the existing insurance wrapper. This way, the policy holder remains in his contract and in his fund investment. But still gets a monthly tax-optimized payout he can rely on. This payout is much higher than the annuity factor the insurer can provide. The insurer also has many advantages. Far less reserves are needed and earning potential remains because the contract is not terminated.
What are you looking for when cooperating with life insurers?
The life insurer should be open to new innovations. In addition, products should already exist in the area of private unit-linked pensions or wealth management. If this is the case, then it is possible to integrate our AI-based withdrawal algorithms conveniently into any system via API. Let’s not make it too easy for the banking industry. Let’s show our competitors that innovations can also come from the insurance industry!
3Pace Development is one of the 10 startups joining InsurTech Hub Munich FIN:SURE Innovation Sprint. Want know more about their API Based withdrawal algorithms? Check out their website.