Insurance jacket

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With the insurance jacket , a financial investment is embedded in the legal structure of an insurance. The insurance wrapper is one of the bank assurance solutions and to tax avoidance applied and to Erbplanung.

Background and overview

It has always been necessary to keep securities accounts in a suitable legal structure rather than in bank accounts as is usually the case and is known under the name of "wrapping". If the covering is carried out with an insurance company, one speaks of an insurance covering. Unit-linked life and annuity insurances are particularly suitable for covering; More specific sheaths can be built up with funds of funds , foundations and trusts (foundation under Anglo-Saxon law).

The subject received additional impetus from the 2008 corporate tax reform in Germany and the associated introduction of a flat tax from January 1, 2009. With a suitable insurance cover, the flat tax can be avoided as far as possible.

Participants in the construction

The following partners are required to set up an insurance jacket:

  • A custodian, this is where the securities are held in the name of the insurance company.
  • An insurance.
  • An asset manager who does the building of the shell.

Benefits of sheathing (with life insurance)

Existing securities accounts can be transferred to life insurance as premium payments. In addition to the tax advantages, the coating offers other advantages:

  • Further tax savings: Life insurance policies are not subject to income tax during their term . After a minimum term of 12 years and a payment after the age of 62, only 50% of the pro-rata profit from the withdrawal is taxed. If the insured dies, the payment is 100% tax-free.
  • All administration costs, fees and transaction costs can be deducted 100% from taxes. There is no limit to income-related expenses or the savings allowance.
  • Since there is no tax liability during the term of the insurance, the administrative burden can also be reduced. It is no longer necessary to collect interest and dividend certificates for income tax.
  • Free choice of investments without having to pay attention to tax aspects. Changes in strategy have no negative tax consequences.
  • Under certain circumstances, protection against seizure of the insurance cover is possible.

Disadvantages of sheathing (with life insurance)

  • The portfolio must be actively managed. As a private investor, it is not possible to make changes to the encased investment yourself. Influence is possible at any time via the asset manager. A change to the portfolio can also be made by an authorized consultant who meets the legal requirements.
  • When choosing an insurer, great caution is required, as in some cases high acquisition and management fees are charged, which can almost negate the tax advantage.

Legal requirements for the intermediary

According to the Insurance Brokerage Ordinance ( Federal Law Gazette 2007 I p. 733 , EUVRL), asset managers who offer and broker bank assurance solutions require authorization to conclude insurance contracts. In addition, financial loss liability insurance and an entry in the insurance broker register are required. The political discussion about the implementation of this tough directive is not yet over.