Why is life insurance often deemed an overlooked asset for companies? 

Our life insurance offerings for legal entities are designed specifically for fully taxable companies adhering to Luxembourg's accounting standards. Despite offering significant advantages in terms of flexibility, protection, and asset management, these instruments are seldom considered within the broader investment strategies of companies. These unit-linked contracts are treated as fixed assets, valued at acquisition cost, and exhibit seamless integration between their accounting and tax treatment. Additionally, the security triangle mechanism in Luxembourg, unparalleled in Europe, ensures robust security and guarantees recovery in the event of default. When combined with a death cover, these contracts effectively function like "key person" insurance. 

 

What are the principal accounting and tax benefits of these contracts? 

Unit-linked life insurance policies offer a streamlined accounting practice through a single entry on the balance sheet, simplifying financial reporting and providing tax benefits. Unrealized capital gains are not taxable at the policyholder's level, while unrealized capital losses, recognized each accounting period, remain tax-deductible. Tax advantages extend to redemption as well. Losses incurred are deductible, potentially reducing overall taxable income, and recognized income is subject to the aggregate tax rate but can be offset with tax loss carryforwards. These policies may qualify for a capital gains tax deferral if proceeds from a sale are reinvested, offering strategic tax planning benefits. Moreover, due to their favorable impact on wealth tax, these policies enhance long-term profitability and are advantageous for wealth management. These features make unit-linked life insurance policies an effective tool for financial and tax management, promoting long-term financial growth. 

 

Is a life insurance policy truly a cure-all solution? 

While no product is perfect, this one boasts a suite of benefits that are often overlooked: 

 

• Diverse Investment Opportunities: It offers a broad investment universe, meeting the needs of even the most demanding investors. 

• Flexibility: The product provides high flexibility, accommodating various support structures, management styles, and custodian banks, including those outside the European Economic Area (EEA). 

• Enhanced Security: It is regulated under the strict supervision of the Commissariat aux Assurances, which includes a tripartite agreement and quarterly inspections of the representative asset register. 

• Preferential Creditor Status: Policyholders are granted the status of first-ranking preferred creditors of the insurance company concerning the assets representing the technical provisions. 

• This product is not a cure-all, but it is a solution that merits serious consideration for its comprehensive advantages. 

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