There is a life insurance option that can be used as a form of savings. And within this possibility the Income would be framed. We explain to you what Rents are as insurance and what types there are.
The Income can be used as insurance itself or as a collection option in insurance with benefits in the form of capital. They are charged as long as the insured lives, periodically (monthly, quarterly, annually). Payment can be obtained at the beginning of the period (prepayable) or at the end (postpayable). This last option is the most common.
Types of income such as life-savings insurance
1.- Depending on its duration
- Annuity: It is charged while the insured lives, ceasing its payment in the event of death. It is the most common and is used for retirement payments and the like.
- temporary rent: It is charged while the insured lives but at most until the end of the agreed period.
It must be understood that retirement plans usually guarantee the collection of capital at retirement age, with the option of converting the collection into an income, normally for life. Alternatively, a deferred annuity for life could be contracted directly for the same purpose.
2.- Due to premature death of the insured
In order not to lose the investment in the event that the insurance holder does not collect or has collected one or few payments, you can opt for:
- Rent with return of premiums: In the event of the death of the insured, the premiums paid are returned. The return of premiums in the deferral period is frequent, since no rent has begun to be collected yet, and it is rare that the premiums are returned when the rent has already begun to be collected. Once the rent collection has started, it is more common to find a reversal percentage or a certain payment period as indicated below.
- income with reversal: In the event of the death of the insured, a percentage of the rent is reverted to another person, that is, that other person begins to collect a percentage of the rent that the Insured charged. It is commonly used in retirement payments as a reversion to the spouse of the insured.
- Rent with guaranteed period: In the event of the death of the insured, the rent continues to be collected by the designated Beneficiaries until the end of the agreed period, counted from the moment the first rent began to be collected (for example, for 5 or 10 years).
Income Taxation
In savings products, taxes are only paid on the returns obtained and not on the principal capital.
In the rents it would be necessary to divide each charge in two parts: the financial return obtained and the consumption or amortization part of the amount involved in establishing the income (single premium or optional capital), in a similar way to loan amortization installments. But also, in income, the amounts vary depending on the age of the insured. But apart from these calculations, taxation has been simplified in personal income tax, understanding that there is a fixed percentage of income that must be taxed by age brackets.
These are the percentages that must be paid and are applied to the total annual charges:
1.- Lifetime
The percentage is calculated according to the age of the insured at the time of constitution of the income, and it remains constant for the entire duration of the same even if it turns years.
- 40% of the annual charge, if the insured is under 40 years of age.
- 35% of the annual charge, if the insured is between 40 and 49 years old.
- 28% of the annual charge, if the insured is between 50 and 59 years old.
- 24% of the annual charge, if the insured is between 60 and 65 years old.
- 20% of the annual charge, if the insured is between 66 and 69 years old.
- 8% of the annual charge, if the insured is over 70 years of age.
Therefore, the effective taxation is the percentage indicated in the previous table, applied to the taxation of other savings products. Taxation on other products is by sections, 21%, 25% or 27% depending on the performance amount (The higher the tranche, the higher the tax). If when constituting the income you are 65 years old, for example, for your whole life you are taxed annually at 24% of 21%, 25% or 27%, that is, an effective rate of 5.04%, 6% or 6.48% for each tranche respectively.
2.- Temporary
The percentage is calculated according to the rental duration at the time of constitution of the same, and remains constant for the entire duration.
- 12% of the annual charge, if the duration is equal to or less than 5 years.
- 16% of the annual charge, if the duration is greater than 5 years and equal to or less than 10 years.
- 35% of the annual charge, if the duration is greater than 10 years and equal to or less than 15 years.
- 25% of the annual charge, if the duration is greater than 15 years.
After the explanations of what Annuities are as insurance and what types there are, it is time for you to enter our life insurance comparator and look for the type that best suits your needs. If the numbers are not yours and you get dizzy with accounting terms, we encourage you to contact one of our expert advisors so they can answer your questions and find the most suitable product for you. You can request that they call you or dial directly the telephone numbers 91 218 21 86 – 932 990 416.
