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?
![life insurance and skipping a generation-1-mobile](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Mobile-Infographie-05.png)
![life insurance and skipping a generation-1-tablet](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-01.png)
![life insurance and skipping a generation-1](https://www.life-insurance360.com/sites/baloise/files/styles/media_910/public/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-01_0.png?itok=byNfF1dy)
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).
![life insurance and skipping a generation-2-mobile](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Mobile-Infographie-06.png)
![life insurance and skipping a generation-2-tablet](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-02.png)
![life insurance and skipping a generation-2](https://www.life-insurance360.com/sites/baloise/files/styles/media_910/public/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-02_0.png?itok=OyCMQOgI)
On the death of the insured
![life insurance and skipping a generation-3-mobile](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Mobile-Infographie-07.png)
![life insurance and skipping a generation-3-tablet](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-03.png)
![life insurance and skipping a generation-3](https://www.life-insurance360.com/sites/baloise/files/styles/media_910/public/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-03_0.png?itok=RZmCi_BB)
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
![life insurance and skipping a generation-4-mobile](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Mobile-Infographie-08.png)
![life insurance and skipping a generation-4-tablet](/sites/baloise/files/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-04.png)
![life insurance and skipping a generation-4](https://www.life-insurance360.com/sites/baloise/files/styles/media_910/public/2020-05/Infographie_Chapitre9-EN_Desktop-Infographie-04_0.png?itok=pYsCqQuj)
Advantages | Key points |
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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.