Risk Protection and Savings with Life Insurance in Pillar 3a

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The tax-saving advantages in the tied pension provision can also be used for life insurance. In this way, pension funds can combine risk and survivors' insurance with savings schemes for old age, thus minimising the supply gap.

Lebensversicherung 3a

The tax advantages of life insurance policies in the pillar 3a

Capital paid into pillar 3a policies can be deducted from the taxable income in the maximum amounts. In addition, interest is not taxed in pillar 3a. The tax advantage can also be extended to life insurance in the pillar 3a. The capital is therefore only available for the old-age provision or in the event of a claim. In doing so, the statutory provisions permit the purchase of pension commitments five years before and five years after the retirement age. For further information, please visit our page on the pillar 3a calculator.

In addition, policyholders must comply with the contractual agreements of the policy on capital. Life insurance policies are generally long-term. The capital is permanently tied up and can only be collected under considerable losses. In addition, rules for pillar 3a payment must be observed: losses due to a job loss, for example, can lead to losses in the return. As a result, life insurance policies offer less flexibility and require a much more careful financing plan.

The different forms of life insurance in pillar 3a

In the market, providers offer a range of different life insurance products. Here is an overview:

  • The mixed life insurance: In this case, the death is insured, in which a beneficiary receives the insurance sum including the growth. In the event of a survival, for example, when the statutory retirement age is reached, the capital plus surpluses is paid to the policyholder.
  • The risk life insurance: This is primarily used to protect surviving family members in the death of the insured. However, other persons can be insured outside the family. Because it is a pure risk insurance, benefits are only paid in the event of death.
  • The retirement pension: This consists of an insured retirement pension at a previously agreed level and a savings phase, which is financed through premium contributions. Insurers offer different models for payment (a one-time deposit or periodic deposits) as well as for pensions (decreasing, rising, constant pensions). As a rule, the insurance can be transferred between two persons in the policy. The retirement pension will be paid to the second person on the death of the policyholder.

Returns and risks

Life insurance products on the market offer different high returns and with the level of yield prospects, the risks of losses increases. For life insurance with higher yield potential, the share of capital invested in equities is high. Meanwhile, the proportion of equities is now legally limited to a maximum of 50% by law.

MoneyPark advises you competently and independently in the product selection in the tied pension provision. We will clarify with you whether life insurance is useful in pillar 3a and which other pre-emptive models are available at banks. The selection of the strategies is very important here. You can apply numerous precautionary accounts, forms of securities and investment funds in pillar 3a and you can take out life insurance in the form of free provision (pillar 3b). MoneyPark helps you make the right decision.

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