Luxembourg life insurance for expatriates

Why take out a Luxembourg life insurance policy?

Taking out a Luxembourg life insurance policy is an excellent financial investment for several reasons. Luxembourg life insurance offers a high level of investment security. It allows, against payment of premiums, to benefit from a capitalization support, usable in case of life or death of the subscriber. This contract also applies within a particularly advantageous civil and fiscal framework.

It is particularly advantageous for expatriates and for an international mobile clientele.

Luxembourg life insurance offers, in addition to the diversification of financial investments, an interesting profitability, a tax neutrality and a security with regard to the deposited assets.

What is Luxembourg life insurance?

At first glance, Luxembourg life insurance is a classic life insurance contract. The subscriber agrees to pay regular premiums (or a single premium at the opening) which will be invested in financial vehicles, money market, bonds or stocks, depending on the chosen risk profile and expected return. It is also possible to make free payments. Luxembourg life insurance offers great investment flexibility.

The contract is taken out for a fixed term, determined on the date of subscription. However, the Subscriber may withdraw the funds at any time. At this time, there is no penalty for early withdrawal. The subscriber will get back his funds valued at time t.

It should be noted that subscription and management fees are applied to the amounts invested.

In case of life of the subscriber and at the end of the contract, the life insurance allows the payment of a capital or an annuity. In the event of retirement, the subscriber can, for example, opt to receive regular income. It should be noted, however, that in the event of payment in the form of an annuity, the guarantee of transmission of the capital to the beneficiaries is eliminated.

In case of death of the subscriber, the beneficiaries designated in the contract receive the capital excluding inheritance tax.

Moreover, under Luxembourg law, the subscriber of a life insurance contract benefits from the “Triangle de Sécurité” and a “Superprivilège”.

Safety triangle

First of all, the Luxembourg life insurance contract is not part of the balance sheet of the insurance company with which it is subscribed. It is registered with an independent custodian approved by the Commissariat aux Assurances. The CAA exercises oversight to ensure the balance between the technical reserves and the representative assets.
The funds saved are separate from those of the insurance company’s shareholders and creditors. This way, clients have their assets protected.

Super-Privilege

Moreover, in case of bankruptcy of the Insurance Company, the subscriber of the Luxembourg life insurance contract is a first rank creditor on the Regulated Assets through the CAA. This super-privilege applies before other creditors, including public ones! The saver is therefore certain to recover his financial assets. In addition, unlike other countries, such as France for example, the guarantee is unlimited.

Tax neutrality of Luxembourg life insurance

One of the major characteristics of the Luxembourg life insurance contract is its tax neutrality. It is adapted to the country of residence and/or nationality of the subscriber. This is why life insurance offers several major advantages for expatriates and geographically mobile people, especially when they regularly change their country of residence due to professional transfers.

Because of the tax neutrality of life insurance, Luxembourg does not tax either the premiums or the capital gains realized at the time of surrender or at the expiration of the contract.

Depending on your country of residence, your life insurance policy can provide you with a higher net return, once taxes are deducted.

A secure investment

As far as the security of its investments is concerned, Luxembourg is renowned for its economic and financial stability . This stability is praised every year by the rating agencies.

Moreover, with life insurance the saver can choose to invest in many currencies and units of account. Luxembourg life insurance contracts thus protect against unfavorable currency exchange rates. The Subscriber can choose to pay his savings in the currency of his country of residence. This makes it easier to make payments or withdraw savings in another currency. This is all the more interesting if the subscriber has changed his country of residence in the meantime.

Finally, Luxembourg law has established confidentiality as a basic principle of exchange. Creditors cannot seize life insurance policies. On the other hand, they can be pledged as collateral for a loan to finance a real estate purchase, for example.

Which insurance contracts are mandatory in Luxembourg?

On another note, investing in real estate with crowdfunding also allows you to safeguard your assets while receiving rent.