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2 insurance policies to protect your loved ones in the event of death
Insuring the future of your loved ones also means guaranteeing that they will not be financially disadvantaged if you die. However, with the complexity of numerous insurance policies, it does not make things easy. Which ones would cover your loans? Your child’s future studies? What are the advantages of taking out life insurance in Luxembourg?
Leave behind savings rather than debt
Buying a house, starting a family, or forming a blended one, they are all steps that involve thinking about your financial future and that of your loved ones. Here are three examples of cases that allow you to plan ahead to make sure they will be comfortable.
Buy property with outstanding balance insurance
Leave your property to your loved ones, but not the loan attached to it: this is the aim of outstanding balance insurance. In the event of death or total and permanent disability, this insurance will reimburse the bank for the remaining balance of the loan. Your family is protected: they can continue to enjoy the property without having to pay back the loan.
At Foyer, the temporary outstanding balance insurance (TSRD) comes with a “right to be forgotten” agreement that allows people with an increased risk due to a cancerous pathology to still be able to take out this insurance.
Financing your children’s education with life insurance
What if you have recently become a parent and you want to save for your child’s future education?
Life insurance works by setting a premium to be paid monthly or annually for a predetermined period (minimum 10 years). This insurance solution combines savings and protection. It allows you to put money aside and to secure a financial capital for your child if you die.
Let’s take the example of Foyer’s protect4life solution. This provides for payment to the beneficiary of the full amount of the scheduled premiums in the policy in the event of the death of the insured. If the death is accidental, this amount is doubled. In addition, the insurance company continues to pay the premiums and the entire capital will be paid out again at the end of the policy.
Form a blended family and designate new heirs
A life insurance policy is an excellent tool for handing down financial assets. It gives control over a part of the inheritance to benefit people other than the legal heirs, while complying with the legal shares.
For example, life insurance allows a blended family with unmarried spousesto review the allocation of the estate to include the new partner. You are also free to change this list of beneficiaries at any time and without having to go through a notary.
In the event of death of the insured, the company will pay out the maximum amount between what the person has saved and the minimum death benefit that has been chosen. The policyholder chooses a minimum death benefit of 60%, 100% or 200% of the total premiums under the policy.
Tax deduction, triangle of security, super privilege: 3 financial advantages of taking out life insurance in Luxembourg
Life insurance does more than provide for the finances of heirs. It also offers advantages to the policyholder. Even 3 advantages:
Tax deductibility
Your life insurance allows you to deduct up to €672 per year from your tax return. This amount is doubled if you are married and can be increased by €672 per child. In short, if you have a spouse and two children, you can deduct up to €2,688 per year.
Optimum protection for invested assets
Luxembourg has one of the strictest financial protection systems. The concept of the triangle of security is a unique scheme that offers maximum protection for your assets.
This is because the money you invest is not kept directly by the insurer, but must be paid into a special account at a depository bank approved by the Insurance Commissioner that is different from the insurer’s own accounts. Your assets are therefore kept legally separate from those of the insurer’s shareholders and creditors.
This “Super-privilege” allows you to recover the totality of your capitalised savings taking priority over any other creditor.
