When clients who are around 65 years old ask us for information about savings insurance products or investment, in Euroteide Seguros (Insurance Advisors and savings and investment products) We usually suggest, among other alternatives, hiring a Life annuity insurance.
From our professional point of view, the Life annuity insurance It is a very interesting option at any age, as long as the client's priority is their financial security from the moment of retirement.
And what is a life annuity for people over 65?
Well, regardless of the age at which it is contracted, it is an insurance product that allows the policyholder transform your savings into a monthly income that you will collect for life.
Are you interested in knowing more about what a life annuity is?
In the following lines we explain everything you need to know about this type of Insurance and why you should seriously consider the possibility of hiring one.
Why have annuity insurance at age 65?
These are the three main reasons why it is advisable that you hire a Life annuity insurance when you have turned 65.
- Future financial security
Obviously, this is the most important motivation: by taking out annuity insurance, you ensure that you receive a fixed and guaranteed income every month and until you die, in addition to the pensioner benefit that corresponds to you by law.
- Favorable tax treatment of income received
The tax advantages are not negligible either: the first is that, according to current legislation, only a part of the annuities you receive will be subject to taxation.
The percentage of taxable income and the tax rate will depend on your age at the time of collecting the income, Both the base and the applied rate decrease as the age of the recipient increases. If you want to know the exact percentages, below you will find the life annuity table and its taxation by age.
- Exemption from personal income tax taxation for capital gains
The second tax advantage is that if you reinvest the amount obtained from the sale or transfer of some asset (such as a home or a package of shares) in annuity insurance, and you are also over 65 years old, you can benefit from a total or partial exemption from personal income tax taxation for the capital gain generated.
The annuity and its taxation
This is the table of brackets, according to age, with the percentages of the annuity that are subject to taxes and their corresponding tax rates:
- Less than 40 years: You are taxed on 40% of the income received, with a tax rate of 8%.
- Between 40 and 49 years: You are taxed on 35% of the income received, with a tax rate of 7%.
- Between 50 and 59 years: You are taxed on 28% of the income received, with a tax rate of 5,6%.
- Between 60 and 65 years: You are taxed on 24% of the income received, with a tax rate of 4,8%.
- Between 66 and 69 years: You are taxed on 20% of the income received, with a tax rate of 4%.
- 70 or more years old: You are taxed on 8% of the income received, with a tax rate of 1,6%.
Investment of capital gains in annuity insurance
Additionally, if you have recently obtained a capital gain, annuity insurance is an ideal product to avoid paying taxes on that gain. For it, You must be 65 years old or older and reinvest in the Life Annuity Insurance the entire amount obtained from the transfer of assets, with a maximum allowed of 240 euros.
As an example, suppose you have sold an apartment for 175.000 euros. If you are 65 years old and invest all the money in annuity insurance, the entire capital gain is exempt from personal income tax. You can also choose to invest only part of the capital gain. In that case, you are entitled to tax exemption on the invested part.
In both cases, to obtain this tax benefit you must contract Life Annuity Insurance. before 6 months have passed since the transfer of assets. Likewise, there are other conditions that vary depending on each particular case.
Types of annuity insurance
Each insurer has its own types of annuity insurance. These are the most common types, in terms of when the benefit starts to be collected:
Immediate annuity
The insured can claim payment of the annuity whenever they wish.
Deferred annuity
The insured and the insurer agree on a date on which the former will begin collecting the rent. Typically, this date coincides with the policyholder's retirement date.
And regarding the capital invested
Reserved Capital Life Annuity
The insured can cancel the Insurance whenever they want and recover the capital. You can also designate beneficiaries to receive the remaining capital in the event of the policyholder's death.
Life annuity of transferred capital
The insured cannot recover the money invested. And if the insured dies, the heirs do not receive the difference between the capital invested and the income received.
Mixed annuity
There are multiple variants that combine some conditions of transferred capital with others of reserved capital.
And how are monetary contributions made to this type of Sure?
You can choose to pay the premium in two ways:
Single Premium Annuity Insurance
The total contribution is made upon signing the insurance contract.
Extraordinary premium annuity insurance
The contract establishes several contributions of lesser amounts than the total premium.
Now that you know what a life annuity for people over 65 is, we are almost convinced that you are asking yourself some questions for which you have not found answers in the previous lines. In that case, contact us: the experts in investment and savings products de Euroteide Insurance We are at your entire disposal to answer them.
