Savings insurance

These policies are ideal for those with a cautious profile who want to set up a regular savings system and, in certain cases, to have additional cover in the event of their death. The age limit depends on the type of policy but is generally 60 years old.

• Regular Savings Plans (PIAS: Planes Individuales de Ahorro Sistemático): long-term savings insurance that guarantees the beneficiary a life annuity if they live beyond the maturity date of the contract signed with the institution. The advantages of regular savings plans include their low tax exposure and that you do not have to make contributions on a steady, fixed basis.
• Unit Linked insurance: has the advantage of being a hybrid savings/investment product. This allows the beneficiary to decide what type of assets they want to invest in (bonds, shares or others), as you have more freedom to manage your funds than in other policies.
• Insured Pension Plans (PPAs: Planes de Previsión Asegurados): long-term individual savings insurance subject to a legal and tax regime similar to that of pension plans. Indeed, their main purpose is to supplement the beneficiary’s retirement savings. 
• Long-term savings plans (SIALP: Seguros Individuales de Ahorro a Largo Plazo): these are guaranteed to deliver at least 85% of contributions. Like the example above of life annuity, these policies enjoy favourable tax treatment that is made clear on signing the contract. In addition, provided that the deposit is kept for at least 5 years, you can enjoy the tax benefits and a maximum annual contribution of €5,000.

The main purpose of insured pension plans is to create capital through savings to supplement the state pension when it is time to retire. 

Insured pension plans can only be redeemed on retirement or in specific circumstances, such as long-term unemployment, incapacity for work, dependency or serious illness, among others. Contributions are restricted to €1,500 per annum.

The sums contributed annually can be deducted from income tax (IRPF) as they reduce the taxable base. Since 2022, the rate of taxation on this product has been the lower of €1,500 or 30% of income from work and economic activities. 

Unit linked insurance policies are a hybrid of life insurance and investment funds. That is, they are life insurance policies in which the policyholder chooses the fund in which they want to invest. For this reason, part of the annual investment must be spent on paying the life insurance premium. With the remaining capital the managers will invest in a basket of investment funds as any other fund manager’s portfolio  would do. 

When it comes to taxation, as is the case with funds, you don’t have to pay to move the money from one fund to another; taxes need only be paid on the fund when the money is cashed out. At that point, it will be taxed as savings income as capital gains. The level of tax will depend on whether it is a cash-out or a death. In the former it will be included in your income tax return as capital gains. In the latter, the beneficiaries of the policy are liable for inheritance tax.  

In the Unit Linked insurance that we sell, the part that is not earmarked for the life insurance can be invested in two ways: 

• As Global Investment Insurance, in which the policyholder will link the premiums to the different investment options available. 
• As an iProtect long-term savings plan (SIALP). Although this is also in units of account, it behaves and is taxed as a long-term savings plan (SIALP), as part of the Long-term Savings Plan (PALP: Plan de Ahorro a Largo Plazo).

SIALPs are life-savings insurance products that give the bearer a regular return. Furthermore, provided that the deposit is held for at least 5 years, you are eligible for tax benefits. Contributions are limited to €5,000 per annum.

The taxation regime on SIALP is very benign. Not only does it secure capital, but it is exempt from paying any gains. In other words, no tax is payable on the return if the investment is held for at least 5 years and the amount per person per annum does not exceed €5,000.

The strengths of this long-term savings insurance are as follows:

• No tax is paid on the investment (as long as it is held for at least 5 years).
• 85% of the capital is insured at maturity, so losses are limited to a maximum of 15% of the capital. Again, this capital is only insured if it is held for 5 years.
• Death cover is included.

A PIAS is a life-savings insurance policy to which you make regular contributions (normally monthly) so that you end up with an extra on top of your state pension.

The ceiling for the annual contribution is high: it may not exceed €8,000 per annum and the total accumulated sum must not exceed €240,000.

PIAS have a benign tax regime that allows you to pay up to 92% of capital gains tax in your income tax declaration in most cases. To do so, you must keep the plan for at least 5 years and cash it out as life annuity.

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