Savings and investment are fundamental pillars for achieving stability and long-term financial goals. This is why we offer a variety of savings insurance options and investment plans designed to suit each client’s needs.
What are savings insurance policies?
Life savings insurance is a product that generates considerable confusion among Spaniards, despite the fact that it manages volumes exceeding €160 billion in our country.
Are they life insurance or savings insurance?
In reality, Life-Savings Insurance policies are savings or investment insurance policies that include, among their coverage, a capital amount, generally very low, to be collected in the event of death. This is why we talk about an insurance policy and a premium (the amount we contribute to save or invest), but their real purpose is to save in the short or medium/long term and obtain a return on that saved capital.
Classification of life-savings insurance
Savings insurance (life insurance) is classified into two groups.. It’s often said that, depending on your profile—conservative or risky—you should choose one or the other. The truth is, you should have both to achieve the recommended savings and investment diversification. That is, the money is divided between both products to take advantage of the benefits each offers.
Guaranteed Savings Insurance: Those that offer a guaranteed interest rate.
Policyholder risk savings insurance: These do not have a predefined interest rate, but rather offer one return or another depending on the baskets in which the Policyholder (the investor) decides to invest.
Depending on the insurer, you will be offered more or fewer investment baskets.
Types of savings insurance based on capital
Now that we’ve classified them according to whether or not they have guaranteed interest, there are also different options depending on the contribution or capital you wish to make.
Single contribution savings insurance :
A Single Premium Savings Insurance is a savings insurance policy in which a single, significant initial contribution is made, for example, €10,000 or €50,000. This capital is usually generated from previous savings, severance pay, disability benefits, inheritances, or other similar funds. The purpose of this type of insurance is to maximize the deposited amount over the medium or long term, taking advantage of compound interest and the associated tax benefits.
Periodic Contribution Insurance or Expected Premium
It’s designed to save systematically. That is, to build savings little by little over the years. This contribution is usually monthly, although depending on your needs or income fluctuations, it can be bimonthly, quarterly, semiannually, or annually.
Within the expected premium savings insurance, our insurer offers you 4 savings insurance policies..
PRIME GUARANTEED SAVINGS
Our favorite among guaranteed interest savings insurance policies, without complications.
- Contribution: From €60/month, set the amount and frequency you want.
- Objective: Ideal for achieving your financial goals.
- Liquidity: Available from the first year
Growing savings insurance is an excellent option for those looking for a secure and flexible way to build their long-term savings. This insurance not only offers guaranteed returns but also allows for regular and extraordinary contributions, tailored to your financial needs and goals.
SIALP GUARANTEED
This policy is designed for individuals interested in capitalizing their savings through systematic contributions.
- Contribution: Minimum of €720/year (€60/month) and maximum of €5,000/year.
- Advantages: Tax-free returns if the capital is held for at least 5 years.
- Redemptions: Allows full redemptions and extraordinary installments starting from the first year.
Individual Long-Term Savings Insurance (SIALP) is an attractive option for those seeking a safe and efficient way to save long-term. This plan allows for flexible contributions with an annual limit and offers high liquidity without penalties after the first year. Furthermore, SIALPs stand out for their tax advantages, as the returns are tax-free if certain conditions are met.
GUARANTEED PIAS / RISK TAKER
A PIAS insurance policy is an excellent way to build long-term savings. Currently, as we’ve mentioned, there are two types: guaranteed PIAS and investment PIAS.
- Contribution: Minimum €720/year (€60/month) and maximum €8,000/year. Maximum cumulative contribution of €240,000.
- Advantages: Tax-exempt returns if collected as a life annuity.
- Redemptions: Partial and total redemptions, as well as extraordinary installments, are allowed from the first year.
Knowing what a PIAS is and how it works can help you decide which option is best for you.
UNIT LINKED MULTIFUND INVESTMENT:
Another of our favorites. Multi-fund or Unit-Linked savings insurance offers a combination of flexibility, diversification, risk management, and tax benefits, adapting to both investors looking to start with modest contributions and those who prefer a single, more substantial initial investment.
- Contribution: Minimum of €1,080/year (€90/month) or initial premium of €6,000 (single contribution)
- Advantages: Invest in up to 8 funds. Setting a target premium allows entry at different times, mitigating the impact of market volatility.
- Redemptions: Partial and total redemptions, as well as extraordinary installments, are allowed from the first year.
Advantages of life-saving insurance
Compared to other products such as bank deposits or interest-bearing current accounts, life insurance offers several advantages, such as:
1. Automation and savings discipline
Automating monthly contributions (for example, €60 at the beginning of each month) allows for steady and organized capital accumulation without requiring active effort from the investor. This encourages long-term savings discipline.
2. Compound interest
Life insurance savings policies take advantage of compound interest, where the interest earned is added to the invested capital, thus generating interest on interest. This can result in higher returns compared to products that use simple interest, such as fixed-term deposits, where interest is not automatically reinvested.
3. Deferred taxation
Savings insurance policies are taxed only at the time of withdrawal and only on the interest generated, not on the total accumulated capital. This contrasts with fixed-term deposits and interest-bearing checking accounts, where the interest generated is taxed annually, even if it is not withdrawn.
4. Death benefits
In the event of the death of the insured, the beneficiaries of the life insurance savings plan can receive an amount exempt from inheritance tax. In Catalonia, for example, this exempt amount is €25,000, and the general amount is €9,195.49. Furthermore, the capital is not added to the estate, allowing specific beneficiaries (such as grandchildren, caregivers, partners, etc.) to be directly designated without the capital being subject to the usual inheritance processes.
5. Lifetime character and automatic reinvestment
Life insurance savings policies are typically lifetime products, meaning that the capital does not need to be constantly reinvested to maintain returns. This maximizes the benefit of compound interest over time, providing greater long-term returns.
In short, life insurance savings plans offer a unique combination of savings automation, growth potential through compound interest, tax-deferred benefits, death protection, and the flexibility to designate specific beneficiaries without additional legal complications. These features make them attractive to those seeking a long-term investment strategy with additional benefits for themselves and their beneficiaries.
Who usually takes out life-savings insurance?
Young people between 25 and 45 years old.. Specifically, those who have begun to earn income from work and are looking for options to start saving for the medium term.
Couples with children.. This type of insurance is recommended for couples with children who want to set aside a fixed amount to secure their children’s future. This can be for expenses such as college tuition or other extraordinary expenses, as well as to establish a long-term family financial cushion.
People concerned about tax planning: People who are aware of the importance of optimizing their tax situation and protecting their assets. Life insurance offers several tax advantages and asset protection benefits that are attractive to this profile.
- Deferred taxation
- Exemption from Corporate Tax
- Protection against creditors
WHY SAVE? The 2 Basics
- Emergency Fund: It’s essential to set aside a fixed amount at the beginning of the month to cover unexpected events. These initial savings are essential for all families, providing financial security in critical times.
- Planned Savings: Allocating a portion of our income for foreseeable expenses, our retirement and pension plan, or potential dependent needs. Savings planning is key to ensuring a stable and secure financial future.
Other savings goals
- Major acquisitions, Such as a new car, a down payment on a home, or a rental.
- Medical Treatment: Including fertility treatments or other unexpected medical expenses. If you’re considering this type of policy, knowing how to choose health insurance is essential.
- Vacation Plan and enjoy moments of rest and recreation.
- Education Financing the studies of children or grandchildren to ensure their academic development.
- Legacy and Gift are preparing a financial legacy or gift for a loved one’s coming-of-age.
- Supplementary incomeidows or a widower, provides a supplement to their income.
- Capital for dependency. AAAdependencyth solid and planned financial support.
