Luxembourg Life Insurance Contract

DEFINITION

Luxembourg has established a strict regulatory framework designed to provide the most beneficial protection for interests of individual investors using Luxembourg life insurance contract as an investment tool.

OBJECTIVE, PURPOSE

Luxembourg life insurance is an investment which combines the following within the framework of a long term investment approach:

Various financial vehicles; A specific legal framework; A preferential tax framework. When Luxembourg life insurance contract is used as an investment vehicle, it allows investors to combine financial and patrimonial objectives. In the past life insurance has gradually opened up to investment funds and thus to stock markets. Similarly, its legal framework is simple and legal means of ensuring transfer of constituted assets on good terms and sometimes with the benefit of advantageous fiscal measures are in place.

Investors may use the Luxembourg life insurance contract to invest their savings in one or more investment funds (collective investment fund, i.e. unit trust, or investment trust) in order to receive revenues. The Luxembourg life insurance contract may invest in several investment funds at a time and is therefore said to use a "unit-linked policy". In addition investors can access guaranteed rate monetary products.

ADVANTAGES OF INVESTING THROUGH INVESTMENT FUNDS

First, due to its pooling characteristics private insurance companies can invest in a vast number of investment funds thus allowing investors a dispersion of their capital and a limitation of risks through various styles of management, different strategies and different categories of assets. Such diversification provides greater protection from market risks.

Second, an investment fund comprises various stocks and shares offered by various issuers. This broad diversification of the underlying assets is an important additional factor which reduces investment risks. Such type of risk reduction is not possible within the management framework based on directly purchased shares or bonds.

Finally, investment funds are managed by financial management professionals who possess know-how, expertise and knowledge of financial markets, which is a necessity to secure good performance of investment funds.

ASSET TRANSFER TOOL

Under the terms of the Luxembourg life insurance contract the insurer promises the policyholder, in return for premium(s) payment , to pay to the beneficiary designated by such policyholder, a sum of money...

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