Contractual Savings Institutions

These institutions are contractually bound to save money and then invest it in markets like the Forex Malaysia market. This category includes insurance companies, pension funds and other financial institutions. They are distinguished by their relatively stable inflows of funds as a result of contractual commitments made with pension fund and insurance participants.

These institutions are not usually faced with liquidity problems. Instead, they can choose to invest their money in bonds or in certain cases common stocks.

Life insurance companies are a good example of an institution that offers contractual savings. The life insurance company gets its funds from selling policies to protect income against the loss that may occur due to premature death. Benefits are paid out to the beneficiaries in the case of death and the retirement policyholder. Life insurance can also be used to save money. Due to the predictable flow of their funds, and their predictable outflows, Contractual Savings Institutions Articles, life insurance companies can invest in assets that are more yielding and long-term such as corporate bond and stock. Life insurance firms are subject to state regulation and are more flexible than other deposit types of institutions.

The casualty insurer is another form of contractual saving institution. Casualty insurers sell coverage against losses of property due to theft, fire, accident, negligence or other actuarially predictable causes. They rely heavily on premiums collected from insurance policies. Accident insurance policies provide pure risk protection. Because they do not have a cash surrender value, the policies provide very little in terms of liquidity. The cash flows from policy claims are unpredictable, as one might expect. According to your requirements, contractual savings institutions can meet them. They are important financial institutions in our economy.