Luxembourg life insurance and expatriation
Luxembourg life insurance for expatriates
When you are an expatriate, taking out Luxembourg life insurance is an excellent financial investment. There are several reasons for this.
Firstly, Luxembourg life insurance offers diversified financial investments with attractive returns.
In addition, Luxembourg life insurance offers a high level of financial security. In exchange for premium payments, it provides capitalization support that can be used in the event of the policyholder's survival or death.
Furthermore, this contract applies within a particularly advantageous civil and tax framework. It offers tax neutrality and security with regard to the assets deposited.
Luxembourg life insurance is particularly advantageous for expatriates and mobile international clients.
What is Luxembourg life insurance?
A traditional life insurance policy, but not only that...
At first glance, Luxembourg life insurance appears to be a completely traditional life insurance policy, offering great investment flexibility. However, under Luxembourg law, the policyholder of a life insurance policy benefits from the "Triangle of Security" and a "Superprivilege."
The policyholder undertakes to pay premiums regularly (or a single premium at the outset). It is also possible to make additional payments. The premiums will be invested in financial, monetary, bond or equity vehicles, depending on the chosen risk profile and expected return.
The policy is taken out for a fixed term, determined on the date of subscription. However, the policyholder may withdraw funds at any time. Currently, no penalty is applied in the event of withdrawal before the scheduled date. The policyholder recovers their funds valued at time t.
It should be noted that subscription and management fees are applied to the amounts invested.
Maturity of the life insurance contract
If the subscriber is still alive when the contract matures, the life insurance policy provides for the payment of a lump sum or an annuity.
For example, upon retirement, the policyholder may opt to receive regular income. However, it should be noted that in the event of payment in the form of an annuity, the guarantee of transfer of capital to the beneficiaries is removed.
In the event of the policyholder's death, the beneficiaries named in the policy receive the lump sum, free of inheritance tax.
Safety triangle for life insurance contracts
The "safety triangle" system aims to protect the policyholder of a life insurance contract. Luxembourg life insurance contracts are not included in the balance sheet of the insurance company with which they are taken out.
Life insurance contracts are registered with an independent depositary approved by the Insurance Commission. The Insurance Commission exercises a right of oversight to ensure that technical provisions and representative assets are in balance.
More specifically, the funds saved in a Luxembourg life insurance contract are separate from those of the insurance company's shareholders and creditors. This means that clients' assets are protected.
Super-Privilege for life insurance policyholders
Furthermore, in the event of the insurance company's bankruptcy, the policyholder of a Luxembourg life insurance policy has a "super-privilege." They are a first-ranking creditor on the assets regulated by the CAA. And this super-privilege takes precedence over other creditors, including public creditors! Savers are therefore certain to recover their financial assets.
Furthermore, unlike in other countries, such as France for example, the guarantee is unlimited.
Tax neutrality of Luxembourg life insurance
Another key feature of Luxembourg life insurance policies is their tax neutrality. They are tailored to the policyholder's country of residence and/or nationality.
This is why life insurance offers several major advantages for expatriates and geographically mobile individuals. This is especially true when they regularly change their country of residence due to professional transfers.
Due to the tax neutrality of life insurance, Luxembourg does not tax premiums or capital gains realized upon surrender or expiration of the policy.
Depending on your country of residence, your life insurance policy can therefore provide you with a higher net return after tax.
In addition, you can deduct the premiums paid into a life insurance policy from your taxable income. More information here.
A secure investment
Luxembourg's economic stability
When it comes to investment security, Luxembourg is renowned for its economic and financial stability. This is recognized every year by rating agencies .
Choice of currencies and units of account
With Luxembourg life insurance, savers can choose to invest in a wide range of currencies and units of account. Luxembourg life insurance policies thus protect against unfavorable exchange rates between currencies.
As a result, subscribers to Luxembourg life insurance policies can choose to pay their savings in the currency of their country of residence. This makes it easier to make payments or withdraw savings in another currency. This is particularly advantageous if the subscriber has since changed their country of residence.
Confidentiality and the principle of non-seizability of life insurance policies
Finally, Luxembourg law has enshrined confidentiality as a basic principle of trade. Creditors cannot seize life insurance policies.
Life insurance as a potential guarantee for a real estate purchase
However, they can be pledged as collateral when taking out a bank loan. Ask your bank for more information. Life insurance will enable you to purchase real estate at a lower cost, for example by avoiding mortgage costs on your property purchase.
Preparing for retirement with life insurance
Life insurance can also offer an attractive retirement supplement with more specific contracts such as Retirement Savings Plans.
Don't hesitate to ask your bank or insurance company for more information. They will be able to advise you in your best interests.
Where can you take out life insurance? Which insurance companies are there in Luxembourg?
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