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In the light of the financial crisis, changing geopolitical climate and pressures of taxation and legislation, wealthy individuals face challenges like never before. Over the past few years, we have witnessed the media attention and debate around the Panama Papers and, more recently, the Paradise Papers. Tax optimisation schemes have been focus of major criticism.

In such an environment, how can the wealthy safeguard assets and ensure their smooth transfer to future generations? Virtually every client needs a solution with the flexibility to handle regulatory change and secure intergenerational wealth transfer.

For many, Luxembourg life insurance can be an answer for efficient long-term wealth planning. Not exclusively designed for tax optimisation, life insurance provides for wealth planning solutions which cater to complex family situations and international situations, ensure smooth transfer of wealth to next generations or avoid family disputes which many times probate proceedings bring.

Over the last few years, we see more and more clients who move across jurisdictions for work, retirement and other personal reasons; with the clients’ children or family often also moving on their own, temporarily or permanently, to third countries. These clients seek solutions which are flexible and can be adapted to their needs as they move from one country to another.

The benefit of life insurance being a globally accepted wealth planning solution is the clear guidance from most countries on how policies need to be designed and how local rules apply to it. Thus, solutions can be designed, and often further adapted as clients and/or their beneficiaries move, to meet the local requirements and to benefit from as many advantages as possible, tax or otherwise, available to life insurance in the jurisdiction(s) where the policyholder and the beneficiaries live.

Countries interpret life insurance regulation differently and rules can change. Lombard International Assurance has the capability to adapt policies to local legal requirements. If we know a client’s career will bring him/her from Spain to the UK, then to Italy and back to Spain, we can come up with a solution which will be valid and tax-efficient in all those jurisdictions while making sure the client’s wishes in terms of wealth transfer are respected. Similarly, if a client moves from Portugal to Finland and his/her life policy needs adapting to the new jurisdiction, we generally only need to make some changes to the contract so that it provides all advantages possible in the new jurisdiction of choice of the client.

Also, unit-linked life insurance can also be the wealth planning solution of choice for divorced clients and/or with children from different partners who want to set up clear rules for their succession and seek some privacy, entrepreneurs who want to protect their private wealth from potential future claims deriving from their professional activity, or wealthy clients who would like to set up some controls on how and/or when children or certain family members should access the family wealth.

Again, unit-linked life insurance policies can be designed to serve the above purposes. Beneficiary clauses can be drafted to foresee how the wealth should be distributed, who should get what and when. Furthermore, Luxembourg life insurance contracts offer protection against claims from third parties as insurers are obliged to pay the beneficiaries even against the claims of creditors and legal heirs.

In addition, being a solution widely used by middle classes in many developed countries, and part of the financial mainstream, reduces the chances of life insurance solutions being suddenly barred by local legislation. From a regulatory perspective, life insurance is the preferred vehicle used by many governments to incentivise long-term savings, making it an accepted wealth planning method worldwide. In the context of the social security deficits in many countries and the aging of the population, there are little chances life insurance will lose the protection and advantages many jurisdictions grant to it but on the contrary these will probably increase.

In addition to the benefit of being a globally accepted financial structure, and locally regulated, Luxembourg life insurance policies can hold a variety of assets, including unquoted assets when policyholders are high net worth individuals. This is quite unique and although the risk of loss increases, these assets enhance diversification of the portfolio and potentially bring higher returns, which makes unit-linked solutions very attractive compared to other life assurance products.

In sum, Lombard International Assurance unit-linked life insurance policies are highly flexible and can be tailored to meet the needs of clients and their beneficiaries wherever they are, thanks to a team of over 30 experts specialised on different jurisdictions.


By Pablo Peciña 
Associate Director - Wealth Structuring Solutions
Lombard International Assurance


This article was originally published in Spanish in the March issue of FundsPeople.