asset allocation


Did you know a Unit-linked life insurance policy is an established and internationally recognised tool for wealth preservation. It can be tailored to suit the unique needs of individuals, their families and institutions, with the potential to enhance financial planning.

EUI Private Wealth have solutions in a number of EU jurisdictions, however, investing in a Luxembourg regulated insurance-based investment wrapper can offer several benefits for investors.

Here are some key advantages:

  • Tax Deferral: Luxembourg insurance wrappers often allow for tax deferral on investment income and gains. This means that the investor does not have to pay taxes on the income or gains until they withdraw funds from the wrapper.
  • Diversification: Luxembourg is known for its robust financial services sector and offers a wide range of investment options. This allows investors to diversify their portfolios more effectively.
  • Regulatory Environment: Luxembourg has a strong regulatory framework for financial products, providing a high level of investor protection. The country is also a member of the European Union, which adds an additional layer of regulatory oversight.
  • Estate Planning: Insurance-based investment wrappers can be useful tools for estate planning. They can be structured to facilitate the transfer of wealth to beneficiaries in a tax-efficient manner.
  • Inheritance Tax Reduction: Upon the death of the policyholder, the proceeds from the life insurance policy can be paid out to the beneficiaries. In many jurisdictions, these proceeds can be structured to be exempt from inheritance tax or subject to reduced tax rates. This can significantly reduce the overall tax burden on the estate.
  • Flexibility: These investment wrappers often offer a high degree of flexibility in terms of investment choices and the ability to switch between different investment options without incurring immediate tax liabilities.
  • Confidentiality: Luxembourg has stringent confidentiality laws, which can provide an additional layer of privacy for investors.
  • Double Taxation Treaty Benefits: Luxembourg have double taxation treaties in place with a large number of countries which can help to avoid double taxation on income and gains. This treaty can provide tax relief and reduce the overall tax burden for cross border residents investing in Luxembourg.
  • Professional Management: We can arrange for the underlying investments to be managed by professional investment managers, which can be beneficial for investors who prefer a hands-off approach. Alternatively, we can construct a portfolio to meet your own investment goals with your input.
  • Currency Options: Luxembourg investment wrappers often offer multiple currency options, allowing investors to hedge against currency risk.
  • Access to International Markets: Luxembourg’s financial services sector provides access to a wide range of international markets, which can be advantageous for investors looking to diversify globally.

A Practical Application in Inheritance Tax Planning using Unit Linked Life insurance.

  1. Wealth Transfer:
    • By investing in a Luxembourg life insurance policy, individuals can ensure that a portion of their wealth is transferred to their heirs in a tax-efficient manner. The policy can be structured to pay out a lump sum or regular payments to the beneficiaries, depending on the policyholder’s wishes.
  2. Estate Liquidity:
    • Life insurance proceeds can provide immediate liquidity to the estate, which can be used to pay any outstanding debts, taxes, or other expenses. This can prevent the need to sell other assets at an inopportune time.
  3. Asset Protection:
    • Luxembourg life insurance policies can offer a level of asset protection, shielding the policy’s value from creditors and legal claims. This can be particularly beneficial for individuals in professions with higher liability risks.

Example Scenario:

Imagine an individual with significant assets in multiple countries who wants to ensure that their heirs receive the maximum benefit from their estate with minimal tax liability. By purchasing a Luxembourg life insurance policy, they can:

  • Invest in a diversified portfolio within the policy, benefiting from tax-deferred growth.
  • Designate their children as beneficiaries, ensuring that the policy proceeds are paid out directly to them.
  • Take advantage of Luxembourg’s favorable tax treaties to minimize inheritance tax in their home country and any other relevant jurisdictions.

In summary, Luxembourg life insurance products offer a versatile and tax-efficient tool for inheritance tax planning, helping individuals to preserve and transfer their wealth to future generations with reduced tax burdens.

EUI Private Wealth Ltd is regulated by the Central Bank of Ireland and has passporting rights into all of the EU and EEA.  Call us now on +353 1 234 3787 to learn more.