Nachhaltige Anlagestrategie im liechtensteinischen Lebensversicherungsmantel!

20. October 2022

Savers have a great interest in consistently implementing sustainability at the investment level in their life insurance as well. They therefore need the certainty that only truly ESG-compliant funds are used in the insurance wrapper as well. The following applies: Life insurance and ESG-compliant investing belong inseparably together.


Climate change, child labor, digitalization, natural resource scarcity, violation of human rights, etc.: There are numerous problems in the world that are a cause for concern and that move many people. They are therefore looking for ways to invest their money with a good conscience and thus change the environment, economy and society for the better. This means that sustainability is the social and economic megatopic in the present and the future.


This, in turn, requires huge inflows of capital. Up to €270 billion in annual investment is needed to combat climate change alone, and to achieve the United Nations’ 17 Sustainable Development Goals (SDGs), the United Nations Conference on Trade and Development estimates that $2.5 trillion will be needed every year until 2030.


Sustainable investment is the general term for ethically, socially and ecologically responsible investing. The investments supplement the classic criteria of profitability, liquidity and security with ecological, social and ethical evaluation points. Particularly important are the so-called ESG criteria, i.e. “Environmental”, “Social”, “Governance”: environmental, social and corporate governance.


Market data show that this is not a short-lived trend. The total amount of sustainable investments in Germany was 335.3 billion euros as of December 31, 2020. The total includes sustainable funds and mandates as well as sustainably managed clients and proprietary investments. The continued high growth rate continues at 25 percent, reports FNG – Forum Nachhaltige Geldanlagen.


Selection of sustainable funds in life insurance positive contribution to shaping the future

It is therefore not surprising that savers also want to consistently implement sustainability at the investment level in life insurance. The background: Anyone who takes out a life insurance policy often has the next generation in mind. That is why selecting sustainable funds in life insurance policies that comply with the strict criteria of European legislation is a positive contribution to shaping the future.


But what are these rules? First and foremost, the EU Disclosure Regulation, also known as the Sustainable Finance Disclosure Regulation (SFDR). This is intended to increase transparency about how financial market participants integrate sustainability risks and opportunities into their investment decisions and recommendations. The regulation is intended to make it easier for investors to distinguish between and compare the many sustainable investment strategies available today. The EU Disclosure Regulation aims to provide greater transparency on the extent to which financial products have environmental and/or social characteristics, invest in sustainable assets or pursue sustainable investment objectives.


Consequently, funds are also classified according to these rules. To comply with the SFDR, funds must pursue a sustainability strategy and fulfill various transparency obligations. The focus is on Article 8 and Article 9 funds. Article 8 products must indicate whether they have investments in sustainable investments, and if so, they must disclose whether these investments in activities are in line with the EU Taxonomy Regulation. Article 9 products have decidedly sustainable investments as their objective and must disclose these.


Sustainability funds exist across all asset classes

Thus, investors should take a close look at which funds are offered as part of a life insurance policy. Those who wish to engage in sustainable activities need the certainty that only truly ESG-compliant funds will be used in the insurance wrapper as well. The advantage is that sustainability funds exist across all asset classes. These can be money market funds, mixed funds, bond funds and, of course, equity funds. In this way, investors are given the opportunity to build up a broad fund portfolio within the life insurance policy in order to benefit above average from various concepts, depending on the market situation, while at the same time hedging against capital market risks.


Auch mit ETFs (Exchange Traded Funds, also börsennotierte Indexfonds) lässt sich eine Nachhaltigkeitswirkung im Lebensversicherungsmantel gestalten. Diese passiven Instrumente sind gerade bei einem langfristigen Horizont ein deutlicher Mehrwert, da eine ETF-Police an sich wandelnde Lebenssituationen angepasst werden kann. Bestimmte strukturierte Lösungen, beispielsweise in Form einer flexiblen fondsgebundenen privaten Rentenversicherung, bieten den Zugang zu einem solchen Konzept gegen Einmalbetrag oder laufende Prämie. Das ermöglicht später eine lebenslange Rente oder eine einmalige Kapitalauszahlung.


Life insurance and ESG-compliant investing belong inseparably together

The design of an annuity and life insurance policy under Liechtenstein law as an ETF policy brings tax relief in addition to the advantages in asset management. Taxation takes place when the policy is paid out or when the insured event occurs. In addition, if the policy is structured as an ETF policy, the upfront lump sum is not applicable. Withdrawals or payouts from the policy after the age of 62 are only taxed at half the personal tax rate. This also applies in the case of annuitization. The tax is deferred on withdrawals, so investors benefit from the full compound interest effect during the term of the policy, without the flat tax continuously reducing gains as in conventional custody accounts. If the assets from the ETF policy are paid out to the beneficiaries due to the death of the insured person, neither income nor final withholding tax is due.


In this way, savers achieve a real sustainability effect in the insurance wrapper with their life insurance policies. They can design their policies to be very future-oriented and do not have to make any compromises from an ESG point of view. This also puts an end to the time when life insurance policies were associated with an unfavorable product selection or a lack of diversity within the range of funds: Life insurance and ESG-compliant investing belong inseparably together.

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