Life Assurance (Seguros de vida)
We define life assurance as that in which the insurer is obliged to pay the insured party or beneficiaries of the policy a fixed sum in the case of death or survival at a fixed date in exchange for the payment of annual, quarterly or yearly premiums. Although traditionally it has not been looked upon as a pure investment instrument, more in keeping with the conservative attitude of covering risk than actually making profit, in recent times insurance companies have adopted a more aggressive approach in order to compete directly with other personal finance products such as pensions plans and investment funds although, at present, life assurance only represents 8.4% of the market. In recent times, so-called index-linked life assurance (i.e. linked to one of the financial indexes: Ibex 35, Dow Jones, FTSE etc.) has become very popular as they guarantee a minimum return, thus avoiding the volatility of the stock market, at the same time offering an addition return according to the movements of that index. Until recently it was possible to deduct up to 10% of the premiums paid up in the year from your annual tax bill but that no longer applies although there may be tax benefits on receipt of the capital.