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The first thing you should know about life assurance is that it has very little to do with death. It has become a vital instrument for wealth management. Favourable tax treatment and portability make a life assurance  contract a vehicle of choice for wealthy clients, and an invaluable tool for inheritance and succession planning as well as asset management, tax optimisation and more.

When it comes to High Net Worth asset management, 65% of wealthy clients own a life assurance contract and it’s the leading asset held abroad for over a third of them. There’s also a big role for life assurance to play in helping this type of client prepare for the future: while almost half (45%) recognise the need for a wealth transfer strategy (mainly for tax optimisation) and 25% have made a will, only a minority (30%) have a proper plan in place.


Life ‘assurance’ or life ‘insurance’?

The second thing you should know is the difference between life assurance and life insurance. Although the terms are used interchangeably in many parts of the world, properly and technically speaking they don’t actually mean the same thing. Life insurance, like other forms of widely available insurance, only has a value in the event of a claim. Life assurance, however, mixes investment and insurance: it pays out either a guaranteed minimum or its investment valuation, including the accumulated value of annual bonuses paid by the life assurance company, at the time it is redeemed. These contracts are designed to produce long-term, tax-efficient capital growth.


Definitions and terminology

Life assurance = An agreement between a life assurance company and a policyholder; in return for a payment (premium) from the policyholder, the company commits to pay someone or something (the beneficiary) upon the death of the person whose life is being covered (the life assured).


Life insurance = An agreement between a life insurance company and a policyholder; in return for regular payments, the company commits – for a specific period of time (the ‘term’) – to provide insurance cover to the policyholder, paying a given sum in the event of their death. At the end of the term, the policy ends, and has no residual value. 


[The wording of this explanation is indebted to the online guide to insurance vs assurance provided by Tax Planet; read it in full here].



Luxembourg unit-linked life assurance: a valuable estate planning tool for Family Offices and their clients.

The “globalisation trend” of Family Offices

While Family Offices have traditionally been located in Europe and the United States, their geographical reach is expanding to other areas of the world such as South-East Asia and Latin America where the number of HNWIs and Ultra-HNWIs is increasing rapidly due to the effects of globalisation and the significant economic expansion of emergent economies.

The “contemporaneous” Family Office

Besides the “globalisation” trend of Family Offices, the latter have also enlarged  their traditional functions, services and roles beyond traditional financial planning to a more sophisticated, comprehensive and holistic approach where the financial management is combined with other interests and objectives of the families they serve. In this sense, estate planning and appropriate wealth structuring has become a key aspect of Family Offices’ role and service as it enables them to secure and plan the family’s financial future by building, securing, preserving, and transferring wealth over generations. Moreover, providing more complex and tailor-made services will undeniably allow Family Offices to differentiate themselves from competition in a market that is becoming more global and competitive.

Taking care of taxation

Fiscal aspects will undoubtedly continue to play a major role in family estate planning but Family Offices should understand that in the current context other aspects need to be considered as well, such as for instance: different family members residing in different jurisdictions, minors as potential future beneficiaries of the family wealth or disabled or incapacitated family members.

Selecting the appropriate wealth planning structure

In the complex world of HNW and Ultra-HNW families, no “size fits it all”, that is to say, Family Offices will need to combine different wealth and estate planning tools to reach all the objectives of the families they serve. The Family Office planning “toolbox” has consisted traditionally of well-known vehicles such as Trusts, Foundations or Companies. However, in the current context of transparency and increasing need for substance and economic rationale, other vehicles, such as life assurance linked to investment funds (unit-linked products in Europe or “PPLI” in the American context) are gathering momentum, as an enabler to allow families to combine both financial management and estate planning in a single cost-efficient and transparent framework.

Luxembourg unit-linked life assurance: efficiently combining wealth management and succession planning

For instance, under life assurance “unit-linked” products aimed at HNW and Ultra-HNW individuals, the latter are able to freely chose the financial manager and bank with which they work for their investment planning while allowing themselves the opportunity to design a tailor-made succession planning tool with multiple beneficiaries with different ranks and economic expectations.

At OneLife Luxembourg, we have developed over a number of years an in-depth technical knowledge of life assurance for Private Clients in multiple jurisdictions, including most jurisdictions in Europe and Latin America. Our main purpose and focus is to serve Family Offices and their clients from our Luxembourg Headquarters to implement holistic solutions using unit-linked life assurance as a flexible tool combining estate and financial planning.

Should you be interested in this topic, feel free to contact us with your questions.