Cash value life insurance policies are subject to wealth tax

Cash value life insurance policies are subject to wealth tax, Policies are said to be surrenderable when it is clear that the risk being covered (death or survival) will occur, but not when. Policyholders can cancel such insurance contracts and reclaim the so-called surrender value from the insurer, provided that the insurance premium has been paid over a period of three years. Such life insurance policies are subject to wealth tax. 

The capital was saved as part of Pillar 3a

Assets that have been saved as part of life insurance via Pillar 3a (e.g. with the 3a pension account) are not subject to wealth tax. Income tax at a reduced tax rate is only due when Pillar 3a is paid out regularly after retirement.

What types of life insurance (pillar 3a/3b) are there?

risk

With term life insurance, you can insure against financial losses that occur as a result of death or disability. Did you know? Experts also speak of so-called “biometric risks” in this context. 

death insurance

In the event of death, the surviving dependents of the policyholder (the family or a named person) are protected against the financial and economic consequences of the death insurance. You receive an agreed payment, the guaranteed death benefit.

disability pension

In the event of disability, a disability pension with guaranteed benefits is paid. This is intended to close the gaps in income that arise after a drastic event, such as illness or an accident. 

Savings life insurance (Pillar 3a/3b)

These products include the benefits of a risk policy and make it possible to save capital for the time after retirement and build up a sustainable old-age provision. They are also often referred to as “mixed life insurance” and can be taken out either as a tied pension plan ( pillar 3a ) or as an unrestricted pension plan ( pillar 3b ). Unit-linked insurance is also part of savings life insurance. 

Depending on the situation, a higher return can be achieved with such products than with traditional deposits (eg at a bank).

In order to be able to save enough assets for old-age provisions, capital is increasingly built up through investments in the stock market. Experts recommend combined models for those who build up reserves and make provisions with shares. With these, part of the money is invested in shares and the other part has a fixed or variable interest rate.

There are different providers in the market and you should carefully compare the respective offers.