Life Insurance Defination

Life insurance (or life policy ) is a contract entered into between a private person (the policyholder ) and an insurance company; through this contract, after the payment of a premium (which can be paid in installments), the insurance company guarantees, in the event of certain events relating to the life of the policyholder, the payment of a certain amount or an annuity including interest accrued starting from the date of stipulation up to the moment in which these events occurred.

The figures involved in the stipulation of a life insurance contract are four: the policyholder (the person who takes out the policy and who is generally the person who pays the premium), the insurance partner, the insured person (the person to whom the event is relevant) and the beneficiary (the person who will withdraw the amount or collect the annuity after the death of the policyholder). If the premium is paid through a single payment, it is referred to as a single premium; if the payment is made in installments we speak of a recurring premium, while if the payment of a fixed amount is made on pre-established dates (for example once a year) we speak of a single recurring premium.

There are three types of life insurance: life policy lifeinsurance in case of deathinsurance mixed life.

In the case of a life insurance policy, the insurance company undertakes to pay a certain capital or a life annuity if the policyholder is still alive at maturity. This type of life insurance can have an immediate annuity (the company pays the annuity starting from the date the contract was signed) or deferred (the annuity payment takes effect from a later date (generally speaking of different years) to that of the insurance stipulation date.

In the event of a death policy, the company will pay a certain capital to the beneficiary which will have been previously indicated in the insurance policy. The death insurance policy can be temporary or life-long; in the first case, payment will be made if the contracting party’s death occurs during the duration of the contract; in the second case, however, the payment will be made upon the death of the contracting party without taking into account the moment in which the death occurred.

The mixed life policy provides for the payment of a lump sum (or an annuity) if the policyholder is still alive at the time the contract expires or the payment of an indemnity if the policyholder dies in the period of validity of the policy.

The primary purpose of life insurance is to protect beneficiaries from economic problems that could arise if the policyholder goes to premature death.

Life policies are not part of the inheritance *, which is why the beneficiary can be freely chosen by the policyholder. The beneficiary (or beneficiaries) can be chosen at the time of signing the contract or subsequently by written request to the insurance company; the beneficiaries can also be chosen by will.

The policyholder has the right to vary the beneficiary at will, but the request to the insurance company must be made in writing and not orally.

The beneficiaries of life insurance can be natural persons, legal persons, associations, etc.

Depending on the case, life policies can be taken out in which the insured, the policyholder, and the beneficiary are the same.

Life insurance and tax return

The first types of life insurance that first benefited from tax deductions (pay attention to the difference between deductibility and deductibility ) were those that provided for the establishment of an annuity; generally, they were structured according to a mixed criterion, a part of the periodic payments was used for the creation of the capital which was used to determine the subsequent annuity; another part was used to cover the case of death and was lost if the event did not occur during the duration of the policy.

Life insurance policies with these purposes that were stipulated before 31 December 2000 still enjoy the possibility of a tax deduction today; this must be requested every year based on the amounts that have been paid in the relevant fiscal year; the insurance company must certify that the payments have been made.

Those who have taken out life insurance can deduct 19% of the amount paid in insurance premiums as a tax deduction. The maximum ceiling is set at € 530; this means that up to € 100.70 can be deducted from the taxable amount each year. However, it should be noted that the tax relief is recognized only if certain conditions are met.

As regards tax deductibility, a distinction must be made between insurance contracts stipulated before 2001 and those signed afterward.

As regards life insurance policies stipulated before 2001, insurance contracts that meet the following conditions give the right to take advantage of the tax deduction:

The minimum duration of at least 5 years from the signing of the insurance contract;

No possibility of granting loans in the first 5 years of the contract.

To ascertain these conditions, it is necessary to view the contract or have a specific declaration issued by the insurance company.

On the other hand, concerning life insurance policies taken out after 2001, it is possible to benefit from tax deductions only in the case of insurance contracts that envisage one of the following risks:

permanent disability: the latter must not be less than 5%, whatever the cause, injury or illness;

lack of self-sufficiency in carrying out daily tasks such as: carrying out physiological functions, walking, food intake, and proper personal hygiene;


Normally, the tax deduction is recognized if the expenses are incurred by the declarant for his interest, however, it is also possible to tax the premiums paid in the interest of dependent family members, provided that the total amount is not exceeded 530.

In recent years, the so-called linked life policies ( unit-linked and index-linked ) have spread, ie contracts linked to some speculative financial instrument capable of offering greater earning opportunities over time; in fact, these are real forms of investment that exploit the form of insurance for some of its advantages (in addition to not being part of the inheritance, these policies are inseparable and unclear).