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Mandatum Life

Mandatum Life is a member of Sampo plc. The Sampo Group was originally founded in 1909. The Sampo Group's business is divided into two main business areas:

- Mandatum Life, a life insurance company, operates in Finland and the Baltic countries.

- IF, a P&C Insurance Company is the leading property and casualty insurance company in the Nordic region, with insurance operations that also encompass the Baltic countries and Russia.

The Sampo Group's holding company, Sampo plc, owns and administers the insurance subsidiaries. In addition, the company manages a significant investment portfolio following the divestment of Sampo Bank Group in 2007.

Mandatum Life offers private, corporate and institutional customers the best competence in life and pension insurance solutions. Sampo Life and its partner Kaleva serve more than 445,000 people and just over 21,000 corporate and institutional customers.

Mandatum Life has a 20 percent share of the life insurance market in Finland and is the leader in the corporate market based on premium volume written. Independent surveys have shown Mandatum Life to be the most highly regarded insurance company in Finland for the quality of its service.

Expatriate and TCN cover is handled through our co-owned life and pension insurance company, Nordben Life and Pension Insurance Company Limited. The other owners of Nordben are SPP from Sweden and Storebrand from Norway. These plans can also be pooled with Insurope.

Mandatum Life is also the representative for BUPA International in Finland

Due to the extensive Social Security provisions (e.g., no earnings ceiling in statutory pensions) and due to the availability of low-cost medical services, voluntary employee benefit plans for non-management personnel, as well as for executives are less common in Finland than in many other countries. However, after the mandatory pension (TYEL) reform in 2005 there is a growing trend to supplement the pension cover with voluntary pension policies. In addition most important types of private benefits are life and medical policies.

A. Group Pension Plans

As in the case of mandatory TYEL-basic pension coverage, additional voluntary cover can be taken out with a life insurance company or by establishing a pension foundation or fund. The following description focuses primarily on pension plans arranged through insurance.

Voluntary pension plans can be divided in two groups; Defined Benefit Plans and Defined Contribution Plans. The traditional voluntary pension plans are defined benefit and are called TYEL-additional pension plans or "free-form" additional employment pension plans. Defined contribution plans are normally unit-linked and are herein after referred to Sesam group pension insurance policy.

Mainly all new schemes are set up on defined contribution base and the traditional defined benefit based plans are normally closed for new members.

Defined contribution pension plan is a more and more common tool to manage human resources policy. Offering voluntary pension insurance is a sign that a company has a modern approach to human resources management and that it wants to retain its staff. It is also a good competitive tool in the recruitment market. Defined contribution group pension plans suits the need of senior corporate management and key personnel as well as the company's entire personnel. The voluntary pension insurance is used to complement statutory pension cover and/or lower the retirement age.

The following constitutes a typical defined contribution group pension policy :

Sesam group pension policy:

a) Coverage

The group must be defined based on objective criteria.

b) Benefits

The plan is based on defined contribution. The minimum retirement age is 55 years, but normally 60 to 62 years is used in new policies. Normally the policy includes a life insurance up to retirement which covers the accrued fund in full. It is also possible to include a life insurance during retirement. The policy can also include cover for permanent disability. In this case the accrued fund is paid out as a disability pension .The pension can be paid for a fixed duration or as a life long pension. The minimum duration is two years.

A range of funds can be linked to the policy. In many cases the employees are given the possibility to choose the funds by them selves.

c) Financing

The defined contribution level can be in maximum 20 % of the annual salary. The average contribution level paid by an employer is approximately 2-8 % for employees and for the top management approximately 10-20 %.

The employer is also entitled to collect contributions from the employees by group if this has been specified in the insurance contract. In this case the minimum retirement age is 60 years.

Example of a typical plan:

The company pays an annual premium of 3,500 euros to each member of the group covered. The retirement age is 60-63 years of age and a life insurance coverage is included during retirement. The chart shows the estimated future pension for members in different ages when the annual net profit is assumed to be 6 % and the premium inflation adjustment is 2% per annum:

Age Now Estimated pension

30 years 10,060 EUR / month

40 years 4,470 EUR / month

50 years 1,550 EUR / month

The yield of insurance savings in a defined contribution pension plan and the size of the final pension are based on the development of the value of the investment baskets or investment funds chosen.

Generally, the employer pays the entire premium.

d) Paid-up policy

It is possible to limit the member's right to the paid-up benefit.

e) Taxation

Pensions are taxable income. Premiums paid by the employer are fully tax-deductible. Employees can deduct their contributions in their taxation by up to 5 % of the salary paid by the employer, but the maximum is EUR 5,000 per annum. Total employee contribution can not be higher than the employer's contribution.

f) Administration

Life insurance company.

B. Group Life Insurance

Group life insurance contracts offered by life insurance companies generally have almost identical terms and conditions.

1. Benefits:

Group life insurance is risk insurance. For one employer, the cover can include a lump-sum benefit at death and other benefits as defined below:

a) Lump-sum benefit in case of death: As defined in the policy. If desired, an additional sum may be paid in case of accidental death, the maximum amount being the same as the normal benefit at death. The sums may be fixed or decrease with age.

b) Daily allowance for disability: Paid as agreed for one or two years maximum. Qualifying period can be chosen to in minimum 21 days and in maximum three months. Maximum age of commencement of disability is 60 years.

c) Lump-sum benefit for permanent and total disability: Paid as agreed after one year from commencement of disability. Maximum age of commencement of disability is 65.

Although a group life plan could include several components, it is typical in Finland to have a plan that includes only lump-sum death and permanent total disability benefits. This lump-sum can either be a fixed amount or some multiple of the insured's monthly salary, most commonly 12-24 times the monthly salary.

2. Financing:

Generally, the employer pays the premiums. The premiums depend on sex and age.

3. Taxation:

Premiums paid by the employer are fully tax-deductible for the employer (and not considered as taxable income for the employee). Employee contributions are not tax-deductible.

Life insurance benefits payable to a next-of-kin are subject to an inheritance tax for the part of the sum exceeding EUR 35,000. However, 50% (at least EUR 35,000) of the benefit paid to a widow/widower is always exempt from tax. Lump-sums for disability or illness are exempt from tax. Other payments are tax-exempt to the insured, excluding the daily allowance for disability, which is considered as taxable income.

4. Administration:

Life insurance companies

Employers are more and more covering employees for medical treatment in private hospitals and clinics. The reason for the demand for a medical benefit is an increasing need to get instant treatment in case of sickness or accident.

The product range differ a bit between the insurers, but in following is described a commonly used group medical policy.

1. Eligibility:

A minimum of ten employees is required.

2. Benefits:

The insurance covers expenses caused by an illness or injury and that are not compensated by any law.

a) Medical treatment: The amount of actual costs not covered by any legislation is reimbursed. For each illness or injury, the maximum reimbursement is EUR 10,000.

b) Inpatient care: Fees are paid up to the limit mentioned in point (a), or to a fixed maximum amount.

c) There may be a deductible in the insurance i.e. EUR 30 per treatment.

3. Financing:

The employer normally pays all premiums. The size of the insured group has an effect on the amount of premiums.

4. Taxation:

Premiums paid by the employer are fully tax-deductible for the employer. In case the whole personnel is not covered by a medical policy the premium is considered as taxable income to the employees.

The compensation of expenses is not taxable income.

5. Administration:

Private life and non-life insurance companies.

D. Individual Life and Pension Insurance

Individual pension and life insurance policies have become common during recent years. These types of insurance are most often taken out for top executives or other key persons.

Individual pension insurance may consist of cover for old age, death or disability, or for a combination of these risks. The maximum contribution level is EUR 8,500 per annum and the lowest retirement age is 62 years.

Individual life insurance, on the other hand, may consist of components mentioned earlier in connection with group life insurance arrangements, and may also include a savings component. The yield on the savings sum of an endowment insurance policy is taxed at the rate of 28%.