This is a type of life insurance designed to encourage long-term savings by offering specific tax advantages, and by providing customers with the security of earning interest throughout the entire period of their investment. It offers a lump-sum payment upon reaching its maturity date, in an amount that is known in advance at the time when the contribution is made.
How it works: contributions and redemption
As mentioned at the beginning of this article, the maximum amount you can contribute into one of these products each year is €5,000, as established in the applicable legislation.
However, this amount is not counted in relation to the maximum contribution limits established for other long-term savings products, such as a pension plan, guaranteed benefit plan, employer pension plan, individual systematic savings plan (PIAS in Spanish), etc.
The cited limit also does not include any interest that may be generated by the contributions made into the SIALP. This product allows the customer to recover the full value of the insurance policy, referred to as full redemption, if a sudden need for funds should arise. Customers may also ask to have the total accumulated amount of their contributions transferred into another Individual Long-Term Whole Life Insurance Policy (SIALP) or Individual Long-Term Savings Account (CIALP). However, partial redemptions or transfers are not allowed.
The product is an SIALP with guaranteed benefits paid upon maturity of the contract. However, if the customer opts for a full redemption or transfer, the value received or transferred may be less than the total amount of the contributions made, depending on the current market conditions.
The main thing to remember is that as long as customers comply with the commitment to wait for at least the 5-year period established by law before redeeming their savings, while also complying with the annual contribution limit of €5,000, they will be able to benefit from the most attractive aspect of the product: all of the interest generated up until the redemption date is tax-exempt.