Taxation of savings insurance products

Know the taxation of the benefits derived from savings insurance products
Life savings insurance products offer double protection for the customers that take them out. On the one hand, they include the receipt of a capital or an income derived from the premiums contributed; on the other hand, they also cover the contingency of death of the policyholder, which guarantees that the designated heirs or beneficiaries also receive the payment of an amount that will have been stipulated in advance.
BBVA INSURANCE superior banner BBVA INSURANCE superior banner
Discover BBVA insurance products
What you value the most deserves the best protection.

Unlike other similar financial products, life savings insurance products do not offer tax benefits when they are set up. However, they do offer interesting taxation options when they are received.

To know the taxation of the benefits derived from life savings insurance products, it is necessary to look at both the way in which these benefits are received and who receives them.

Taxation according to the type of benefit received

When the time comes to receive the benefits derived from the life savings insurance policy, it is necessary to decide how you wish to access them. It is not a trivial decision, since it will dictate the different ways in which the money received is taxed through Personal Income Tax.

It must be emphasized that, regardless of the way in which the benefits are received, one of the benefits of life savings insurance products is that you only pay tax on the capital gains, that is, on the interest income that the customer's money has generated within the insurance policy.

There are three ways of accessing the benefits of the insurance: in the form of capital, in the form of a lifetime annuity and in the form of a temporary annuity.

Benefit in the form of capital

If the policyholder of the insurance decides to receive their contributions in the form of capital, they will access all the money contributed plus its interest in one go. The taxation for this form of benefit in 2016, always on the returns generated, is as follows:

  • Tax charge of 19% on the returns when they are less than €6,000.
  • Tax charge of 21% on the returns when they are between €6,001 and €50,000.
  • Tax charge of 23% on the returns when they are above €50,000.
BBVA INSURANCE central banner BBVA INSURANCE central banner
Discover our insurance products
And choose the one that best fits your needs.

Benefit in the form of lifetime annuity

If the policyholder of the insurance decides to receive the contributions in the form of a lifetime annuity, they will only pay taxes on a percentage of the returns, which will depend on the age of the policyholder, as set out below:

Age
Taxation of capital gains
Under 40 years of age
 40%
40 to 49 years
35%
50 to 59 years
28%
60 to 65 years
25%
66 to 69 years
20%
Over 70 years old
8%

The tax exemption in this form of redemption can reach as much as 92%.

Benefit in the form of temporary annuity

The taxation of benefits received in the form of a temporary annuity differs from those received in the form of a lifetime annuity. In this case, the result of applying the following percentages to annuity is considered capital gains:

  • 12% if the income received lasts 5 years or less.
  • 16% if the income received lasts between 5 and 10 years.
  • 20% if the income received lasts between 10 and 15 years.
  • 25%; if the income received lasts more than 15 years.

In other words, the longer the period over which the benefits are received, the higher the taxation percentage the customer will have to pay for them.

Taxation of the benefits when heirs or beneficiaries receive them

If the benefits derived from the life savings insurance are received by someone other than the insurance policyholder, they will be taxed through Inheritance and Donations Tax. In this case, the taxation will depend on the Autonomous Community region in which taxes must be paid.
A/C BBVA INSURANCE A/C BBVA INSURANCE
Insurance - Additionally be able to interest you Insurance - Additionally be able to interest you

You might also be interested in

  • We'll explain what a life annuity insurance is and what its advantages are.
  • Since you are required to pay for damages that you cause to others, a civil liability policy may be necessary.
  • We'll explain how it works, the basics and how to find the one that is best suited to your needs.
Insurance - Tools Insurance - Tools

Tools of insurance

  • Create your own example with your current insurance policies to find out how much you could save if you decide to include them in the BBVA EstarSeguro Plan.