(2025) What does the Retirement Income Act mean for my life insurance?

Since the Pension Income Act in 2005, payouts from capital life insurance are generally taxable. The previous tax exemption has been largely abolished.

Tax Exceptions

Reduced taxation is possible if:

• the contract runs for at least 12 years and
• the payout is made after the age of 60 (from 2012: after the age of 62).

Then only half of the profit is taxable.

For payouts as a pension, only the statutory profit share is taxable. This depends on the age at the start of the pension. As a result, the tax burden is often lower than with a lump sum payment.

Other Types of Insurance

The following insurances are also considered life insurance for tax purposes:

• Education and dowry insurance
• Disability and accident supplementary insurance
• Accident insurance with premium refund
• Dread disease insurance (for serious illness)

Deductibility of Contributions

• Pension insurance without capital option starting before 2005 is still deductible.
• Contributions to provident, pension, widow's, orphan's, and funeral funds can also be deducted, depending on the type of payout.
• Riester contracts must be claimed separately.
• Unit-linked life insurance is not deductible.