The need to obtain resources complementary to those granted by pensions has led to an increase in the demand for life annuity insurance.This type of instrumentoffers a lifetime benefit for its holders in exchange for a one-time contribution.Our Blog
Of course, the amount contributed or capital and the age of the applicant will determine the amount of income that the institution can deliver to the beneficiary.The delivery of the rent can be agreed in semi-annual, quarterly or monthly installments and each option will slightly influence the amount.
Life annuity insurance modalities
There are modalities between which those interested in this insurance can choose.Theinsurance annuity income simplyused as thebasis of actuarial calculations, because the rent is delivered until the time when the holder dies.That is why the older the owner, the higher the amount of rent.Life expectancy is decisive.
In another modality, theguaranteed life annuityinsurance can be contracted.In this case, the term of the benefit is determined in the terms of the contract in a fixed manner, so if the death of the owner occurs prematurely, the legal heirs will continue to receive the rent until the benefit period expires.
In the vast majority of cases, the people who make use of this resource do not have the capital required to obtain a sufficiently significant income, so it is not strange that they resort to the sale of the bare ownership of their properties to achieve such amounts.
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In a high percentage, pensioners own a real estate or main home, which represents a large portion of their assets.It is logical that they look for a way to obtain liquidity at the expense of this asset that has been their savings converted into housing.
Using the bare property resource
Giving bare ownership of the home and maintaining the usufruct of it for life is a way to liquidate part of the property, and also have the necessary capital to acquire the type of insurance that concerns us.
Sometimes an agreement is made with the same investor who accepts the bare property and it is this that is in charge of periodically honoring the delivery of the rent.However, it is necessary to evaluate the offer of the insurance companies, since they can be more beneficial.
Depending on the expected interest rates and the behavior of the stock markets, insurance companies may be able to obtain better dividends on their loans, which consequently translate into more attractive income.
Another aspect that is opposed is the taxation that must be observed in each case.If the bare property is negotiated for a single amount to be received that is, this part of the entire property is sold, it is reported for tax purposes as a sale, although it is later used to contract life annuity insurance.
On the other hand, if in the transfer a life annuity is established directly, this is taxed more favorably, so both options should be balanced before making a decision.
Tax Considerations
The income received by a life annuity insurance is taxed in a decreasing way over time.As those who enjoy this type of income advance in age they contribute less to the treasury.
In itself, taxation is relatively low, reaching just 1.52% on a tax base of just 8% when they are over 70 years of age.
In any case, life annuity insurance comes to meet a need that has been growing and that retirees who have savings of a certain magnitude or some property that they can have, are increasingly grateful.
