(2022) What does the Retirement Income Act mean for my life insurance?

With the introduction of the Retirement Income Act in 2005, the previously tax-free payouts of returns from endowment life insurance were virtually abolished. The payout amounts are now generally fully taxable. However, there is an exception: If the contract runs for more than twelve years and the insurance sum is paid out after the age of 60, only half of the paid-out returns must be taxed. For contracts concluded from 2012 onwards, the age of 62 applies.

If the policyholder receives the insurance sum in the form of a regular pension, only the income share needs to be taxed. The income share is the part of the pension payment that comes from capital gains. The income share is determined by the legislator and depends on the age of the recipient at the start of the pension payments. If policyholders plan to receive their endowment life insurance in the form of a pension, the tax burden has been significantly reduced since 2005 compared to the older regulations.

The following are also recognised as life insurance: education and dowry insurance, occupational disability and accident supplementary insurance to life insurance, as well as accident insurance with premium refund.

Also: Dread Disease insurance, i.e. insurance that pays out in the event of a serious illness.

Contributions to pension insurance without a capital option with a start date and first premium payment before 2005 can also be claimed. Contributions to occupational and pension schemes as well as widow's, orphan's and funeral funds are also entered in the corresponding fields, depending on whether the benefit is paid out as capital or as a regular pension. However, this does not apply to tax-advantaged pension contributions, such as the so-called Riester pension. Contributions for this must be claimed separately. Contributions to unit-linked life insurance cannot be deducted as special expenses.