By taking out a life insurance contract. Depending on the arrangements, these premiums are fixed or variable. They must be paid regularly or not.
In some cases, it is also possible to make additional payments when you wish. On the insured’s death, the insurer undertakes to pay a capital sum to the beneficiary of the contract.
In the context of life insurance, we therefore always find:
- the insurer, i.e., the insurance company;
- the policyholder, i.e., the natural or legal person who takes out the contract and pays the premiums;
- the insured, i.e., the person to whom the event may happen;
- the beneficiary(ies), i.e., the person(s) who will benefit from the sum defined in the contract on the death of the insured (child, spouse, or any other person).
Good to know
The policyholder, the insured, and the beneficiary can but do not have to be the same person.
Who can take out life insurance?
Any investor can access life insurance. Depending on the contract, it may be required to initially invest a certain amount of money more or less critical or pay premiums of a minimum amount defined beforehand.
What are the main benefits of life insurance?
Life insurance is a very comprehensive tool. According to the contract, it allows to:
- flexibly diversify your portfolio: choice of a personalized investment profile according to your financial objectives;
- building up savings step by step, in the medium or long term;
- benefit from death cover ;
- pass on your assets protect your loved ones: you can freely designate the beneficiary(ies) in the event of death;
- secure a mortgage loan in Luxembourg.
What is the tax advantage of life insurance?
Life insurance is also a tax-deductible product. It allows you to reduce your taxes at the end of the year.
If you are a Luxembourg resident or a tax-equivalent cross-border worker, you can deduct the premiums paid under a life insurance policy from your taxable amount.
The amount of the tax deduction varies according to your family situation.
Is life insurance a risky investment?
Luxembourg life insurance also has the advantage of offering exceptionally high security, unique in Europe. Indeed, Luxembourg has defined a rigorous regulatory framework in this area.
If the insurance company goes bankrupt, the policyholder benefits from a super-privilege: he is considered a first-ranking creditor. He will recover the amount of his insurance contract as a priority. Life.
In addition, all of the policyholder’s assets must be held by an independent custodian bank, approved and supervised by the Commissariat aux Assurances.
What are the constraints related to life insurance?
To benefit from the tax advantage of life insurance, you must hold your contract for ten years. It is therefore recommended to keep it at least during this period.
However, if necessary, you can ask to redeem your contract at any time. However, it is essential to remember that such redemption may incur costs. This can also have adverse consequences on taxation, performance, or the capital guarantee of your contract.