Why this is one of the most important financial decisions you'll make
Manager's insurance (bituach menahalim) opened before 2013 — and sometimes later — may include a guaranteed pension factor. What does that mean in practice? That the insurance company commits in advance to how much monthly pension you'll receive at retirement for every ₪1,000 you saved.
In the pension field, a commitment like that is worth its weight in gold. Old factors were much lower than what's offered today — meaning a higher pension. Canceling such a policy can be a mistake that costs you tens of thousands of shekels over your retirement years.
When manager's insurance is worth keeping
- A low (old) pension factor — below 200, and especially below 180. That's coverage that is hard to obtain today.
- Unique coverages — some old policies include disability insurance terms superior to anything available in the market today.
- Guaranteed interest — "with interest" policies (before 1991) provide a guaranteed minimum return — rare and valuable in the current interest rate environment.
When it's worth considering a switch to a pension fund
Not every manager's insurance policy is an asset. Sometimes it's an expensive policy with high management fees, a poor pension factor, and coverages that don't suit your situation. In circumstances like these:
- Management fees in manager's insurance can be 1.5%–3% of accumulated savings — compared with 0.1%–0.5% in a large pension fund.
- If the factor isn't guaranteed — the central advantage disappears.
- If there's no guaranteed interest — then you're simply paying more for identical management.
⚠️ Note: transferring manager's insurance — moving the money into a pension fund — is an irreversible step. Before doing it, you must thoroughly review what your existing policy holds.
The third option: combine
One of the common approaches among independent financial advisors is to keep an old manager's insurance policy with a good factor — and stop contributing new money to it. The existing accumulation retains its advantages, while future contributions go into a pension fund with low management fees.
This strategy requires coordination with the employer and a check with the insurance company — but it can be the most correct solution.
What you can't know without checking
Every policy is different. Age, year of joining, the specific policy terms, health status — all affect the right answer. There is no rule of thumb that fits everyone.
What is clear: this decision shouldn't be made based on the pitch of an agent who earns a commission from canceling the policy — nor on the generic recommendation of "switch to a pension fund because it's better."
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