What are unit-linked (class 23) life insurance products?
A unit-linked product combines life insurance with an investment in one or more funds. The funds in question invest primarily in shares, bonds, cash, real estate or a combination of these assets. The return on this ‘investment-type insurance product’ therefore depends on the performance of the investment.
Why choose a Class 23 life insurance policy?
You are looking for a higher return
Unit-linked life insurance products always entail a potential risk because their return is linked to investment funds. On the other hand, they have the potential to generate an attractive return, especially if you have a long enough investment horizon.
You want to plan your inheritance as thoroughly as possible
A class-23 product is also a life insurance policy. One of the things this means is that, after your death, the money quickly goes to the beneficiary you’ve designated. You can also save on inheritance tax by using this product to bequeath some of your assets to your grandchildren upon your death (or later). We refer to this as ‘generation skipping’.
What is the return on a Class 23 life insurance policy?
The return of a unit-linked investment insurance products is linked to the performance of one or more investment funds. Depending on the selected investment combination, the level of risk you run can, therefore, range from limited to higher. Ultimately, the return depends on the fund performance and how its value changes. The value of such a fund can go up as well as down over time. The associated financial risk is borne by you, the policyholder.
If you prefer a bit more security, go for a unit-linked life insurance product with capital protection at maturity.
How much does it cost to invest in a unit-linked life insurance product?
How much money do you need to invest?
It all depends on the type of unit-linked product you choose. KBC Brussels has products where you can start investing from as little as 25 euros a month, but we also have a wide range of investment funds for larger amounts.
What does it cost?
Most investment-type insurance products require you to pay entry charges, an annual management fee and an insurance tax of 2%. Unlike many other investments, you don’t pay withholding tax on the income from these types of product under the current tax system (unless investment funds are involved that have a (partial) capital protection mechanism). Therefore, it may be worthwhile putting some of your assets into investment-type insurance products for tax-risk diversification purposes alone.