One of the paramount advantages of life insurance regulation is the legal mechanism whereby the underlying assets leave the estate of the policy holder and become assets of the insurance company.

This mechanism ensures that the assets (deposits or investments) cannot be seized, attached or otherwise subjected to any flat tax levy in the hands of the policy holder.

In case of default of any EU member state on its debt service for example, a flat tax on bank deposits may be used as a mechanism to reduce this debt. Life insurance products will escape such taxation simply because the assets are held in accounts owned by the insurer.

An added benefit would be higher net interest rates.

This mechanism is in line with the spirit and objective of life insurance products. The essence of life insurance is indeed to protect assets against future uncertainty.

Contact LIB for free advise on this issue.