Life insurance in addition to covering the death or disability of the insured is also an excellent product for saving and forecasting. The main reason in always combining the advantages of life insurance, that is, covering with part of the premium the risk of death and / or disability while the rest of the money paid is destined to a saving or forecast system, that is to say thinking about retirement.
These two different purposes also generate different characteristics, whereas if we think about short-term savings, total or partial liquidity is allowed in the forecast products, which compete with the pension plans, and therefore stand out in an important aspect, tax relief as an incentive for the hiring of these products.
A specific type of retirement plans are the Insured Pension Plans (PPAs). The PPAs are life insurance whose objective is to constitute a capital in a completely safe way, they share many characteristics and the same fiscal advantages as the Pension Plans, with two differences:
- They necessarily guarantee a concrete yield at maturity. Therefore, they are ideal for those who worry about their retirement and do not want to take any risk with their savings.
- As has been pointed out, the part destined for insurance guarantees a small additional capital in case of death.
The first point is differentiating with pension plans and gives them their main advantage, we can constitute an income knowing not only that we will not lose capital but making a regular contribution and maintained for a while we know what will be the final capital. In the pension plans, if we exclude the guaranteed ones, we have the uncertainty of not knowing what the final result will be and what capital or income we will obtain.
With respect to the common point, with the pension plans, taxation, we must differentiate how the contributions and the final rescue are taxed. Regarding the first, we can obtain a reduction of the general taxable income of the Personal Income Tax , with a limit for people under 50 of up to 10,000 euros, or 30% of their net income from work and economic activities and 12,500 euros or 50 % of income if you are over 50 These limits are common, that is to say, that sum the total of contributions with other Pension Plans and Pension Plans in which we make contributions.
With respect to the rescue, if it is collected in the form of income, it will be taxed as labor income, at the tax rate resulting from adding all the work or professional income of the period. If we do it in the form of capital, it does so equally as a work performance, therefore, by assuming a much larger amount will be taxed at a higher rate and fiscally it is not the recommended option.