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SpanishKey benefits of Luxembourg unit-linked life insurance for Spanish residents
A Luxembourg unit-linked life insurance policy is a long term saving solution, giving access to one of the broadest investment universe and offering one of the strongest protection regime in Europe. It has the potential to enhance wealth and succession planning. The premium from the life insurance policy are invested in diversified portfolios comprising different types of asset classes and balanced according to the client’s investment profile and chosen strategy. The client keeps the right to withdraw funds from the policy at any time and can freely appoint beneficiaries to receive the policy proceeds upon the death or survival of the life/lives assured.
Headquartered in Luxembourg, Lombard International Assurance has been designing unit-linked life insurance policies for over 30 years, offering tailor-made and highly adaptable solutions to HNW Spanish clients, regardless of their evolving personal circumstances.
The 6 key benefits for a Spanish resident to use a Luxembourg unit-linked life insurance policy are described below.
1
Robust long-term solution
Personal Income Tax deferral
- Luxembourg unit-linked life insurance provides policyholders with tax deferral.
- As income generated within the investment portfolio linked to the life contract accumulates under the policy, the client’s taxable income is lower (vs. if the client held the portfolio directly) and Wealth Tax exposure can thus be minimised in some cases.
- It is a wealth planning tool recognised across many jurisdictions.
2
Succession planning
Freedom to appoint beneficiaries
- Beneficiary clauses can be drafted to define the terms and conditions according to which the wealth accumulated under the life insurance policy should be distributed, and to efficiently manage complex situations involving (i) heirs that are legally incapacitated, or not yet at maturity, or (ii) divorced clients and/or with children from differing partners.
- The payment of Spanish Inheritance and Gift Tax (IHGT) can be deferred until the beneficiaries are able to claim the receipt of the policy.
- In the event of death, it provides the beneficiaries with a quick access to liquidity.
“The premium from the life insurance policy are invested in diversified portfolios comprising different types of asset classes and balanced according to the client’s investment profile and chosen strategy. The client keeps the right to withdraw funds from the policy at any time and can freely appoint beneficiaries to receive the policy proceeds upon the death or survival of the life/lives assured.”
3
Safeguarding international clients/families
A highly portable and flexible solution
- Solutions can be designed, and further adapted as clients and/or their beneficiaries move to another country, to meet the local requirements of the jurisdiction(s) involved.
- Spanish Exit Tax, normally applicable to financial assets held by Spanish resident high net worth clients when moving abroad, is not applicable with respect to the value within unit-linked life insurance contracts.
4
Strong protection regime
- For Spanish HNW clients looking for wealth protection, the Luxembourg unit-linked life insurance solution can represent an efficient and flexible instrument. Luxembourg’s policyholder unique protection regime, commonly known as the ‘Triangle of Security offers a strong and proven wealth protection regime from an AAA-rated jurisdiction.
5
Simplification of reporting obligations (Form 720)
- Clients can diversify country exposure of their wealth, holding a Luxembourg life insurance policy, without the need to file Form 720 with the Spanish Tax Authorities. Lombard International Assurance makes the reports to the Spanish Authorities so that the client does not need to file this Form otherwise required for any assets/ investments held abroad.
6
Investment flexibility
One of the broadest investment universes
- Life insurance policies issued by Luxembourg insurers can hold a broad variety of assets, including unquoted assets, depending on the client’s personal preferences, risk profile and circumstances. These assets enhance portfolio diversification and making Luxembourg unit-linked solutions attractive in comparison to other life assurance or investment products.
For professional wealth advisers looking for a compliant, secure, tax-efficient, adaptable and long-term wealth structuring solution for their clients, a unit linked life insurance policy with Lombard International Assurance can cater to their needs.
