Life insurance and skipping a generation
Skipping a generation means passing on an inheritance to the second generation. What is the point of skipping a generation under a life insurance policy and how does it work?
His wish
- To bequeath part of this cash directly to his 9-year-old grandson
- That his grandson may not dispose of these inherited assets until he is 25 years old
Solution
Takes out a life insurance policy drafted to include a specific beneficiary clause with one certain condition, namely:
A beneficiary clause with the obligation to reinvest the death benefits in a life insurance policy and a temporary inalienability clause under which surrenders are blocked until the subscriber's 25th birthday).
On the death of the insured
Profits from the policy are reinvested in a new insurance policy for which the policyholder/insured is the grandson.
Beneficiaries must be the legal heirs.
On the grandson’s 25th birthday
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Sportsmen and the need for an all-round wealth planning.
Depending on the country of residence, on which parts of the policy should a wealth transfer strategy be based?
Introducing risk management to wealth planning - new solutions for nordics
Case Study Italy : Life insurance and beneficiary trust
Life insurance policies and beneficiary clauses in France
Skipping a generation means nominating the second generation as beneficiary of a Luxembourg life insurance policy. The mechanism of skipping a generation allows direct transmission to grandchildren without taxing the estate twice. This facilitates the balance of the intergenerational transmission.