A unit-linked policy is a life assurance product that offers a savings solution. Client’s contributions are invested into a portfolio of assets selected according to the client’s investment profile and chosen strategy. The client keeps the right to withdraw funds from the policy at any time and can freely appoint beneficiaries to receive the policy proceeds upon the death or survival of the life/lives assured.

Headquartered in Luxembourg, we can design uniquely structured unit-linked policies that offer highly adaptable solutions to and flexibility to complement our affluent Spanish clients’ ever-changing personal circumstances and their families.

The primary 6 benefits these solutions provide our Spanish residents are:

1: Robust long-term solutions – Personal Income Tax deferral

  • As opposed to tax optimisation schemes (e.g. SICAVs, SOCIMIs, Holding Investment Cos., etc.), which have been the topic of major criticism in Spain, Luxembourg-based unit-linked assurance is a unique legal tool which provisions for Personal Income Tax deferral.
  • From a regulatory perspective, it is the preferred vehicle leveraged by a number of governments to incentivise long-term savings. It is an exemplary ultra-wealth planning tool worldwide.

2: Succession planning - with a focus on Spanish Inheritance and Gift Tax

  • Beneficiary clauses can be drafted to ascertain the sum, when, how and to whom the wealth should be distributed, and to efficiently manage complex situations involving (i) heirs that are legally incapacitated, or not yet at maturity, or (ii) divorced clients and/or with children from differing partners.
  • The payment of Spanish Inheritance and Gift Tax (IHGT) can be deferred until the beneficiaries are able to claim the receipt of the policy.
  • In the event of death, it provides the beneficiaries with a cash injection to bridge the gap until the estate is settled and/or to pay the IHGT.

3: Safeguarding international clients/families - insurance not subject to Exit Tax

  • Solutions can be designed, and further adapted as clients and/or their beneficiaries move to another country, to meet the local requirements of the jurisdiction(s) involved.
  • Spanish Exit Tax, normally applicable to financial assets held by Spanish resident high net worth clients when moving abroad, is not applicable with respect to the value within unit-linked life assurance contracts.

4: Asset protection

  • 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 (Article 88 of the Spanish Insurance Contract Law).
5: Simplification of reporting obligations (Form 720)
  • Clients can diversify country exposure of their wealth, holding a Luxembourg life policy, without the need to file Form 720 with the Spanish Tax Authorities. Lombard International Assurance makes the necessary informative reports to the Spanish Authorities so that the client does not need to file this Form otherwise required for any assets/investments held abroad. 
6: Investment flexibility - Luxembourg insurance rules
  • Life insurance policies issued by Luxembourg insurers can hold a broad variety of assets, including unquoted assets, if it is possible, taking into account the client's personal preferences and circumstances. These assets enhance diversification of the portfolio and potentially bring higher returns, which makes Luxembourg unit-linked solutions incredibly attractive in comparison to other life assurance or investment products.

In sum, if you are looking for a legal, secure, tax-efficient, adaptable and long-term wealth structuring solution for your clients, a unit linked life policy with Lombard International Assurance should be at the top of your considerations.

Pablo Peciña - Associate Director, Wealth Planning Marta García Cortés - Wealth Planner Spain and Portugal
  Pablo Peciña
Associate Director, Wealth Planning
Lombard International Assurance

Marta García Cortés
Wealth Planner Spain and Portugal
Lombard International Assurance