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Irish Unit-Linked Life Insurance: A Comprehensive Solution for HNW Individuals in Spain


What is a unit-linked policy?

A unit-linked policy is a life insurance product regulated in the European Union as an insurance-based investment product (“IBIP”). The policy is linked to the value of a portfolio of financial assets in which the insurer invests the premium paid, so the policyholder assumes the risk of the investment.

Unit-linked life insurance is a global comprehensive solution that can help to meet all the demands and objectives of high-net-worth individuals in Spain. In addition to facilitating the discretionary management of investments in a wide range of financial assets, it is the only regulated vehicle that allows the asset transmission for future generations to be organised and planned with total confidentiality.

These unique advantages place this product at a superior level when compared with other alternative investment vehicles available in private banking. Furthermore, when an international insurer specialised in this area, such as Utmost Wealth Solutions, is chosen, the product can be easily adapted to the specific needs of each client

The benefits of Irish unit-linked life insurance for Spanish residents

Legal and tax certainty, wealth transmission to future generations and the preservation of family assets are some of the main concerns of private banking clients in Spain. These, as well as other wealth planning needs, can be solved with a unit-linked life insurance policy issued from an Irish insurer. It can offer remarkable advantages, such as the following:

Legal security

It is a well-regulated contract, under both Spanish and European Union legislation, as well as being specifically covered under Spanish tax law, thus providing the maximum legal certainty regarding its treatment.

Estate planning

Unit-linked life insurance permits the ability to specify conditions, terms and dates in relation to the payment of insurance benefits to the beneficiaries. This facilitates an organised transfer of the assets, regardless of their complexity, facilitating tax deferral and potentially improving tax outcomes.

Professional investment management

The client can nominate their trusted asset manager, based in Spain or abroad, for the discretionary management of the policy’s investments. This can be done under one or several investment strategies that the client chooses and modifies whenever they wish (if the investment option selected allows so according to the Spanish tax laws).

Different asset classes

Unit-linked life insurance can allow both traditional assets (e.g. stocks, bonds or mutual funds) and alternative assets (e.g. private equity, venture capital, hedge funds or structured assets), satisfying the expectations of the most sophisticated clients and expanding the available investment tools for the asset manager.

Tax optimisation and simplification

The life insurance policy offers tax deferral benefits in Spain, meaning that there is no taxation until there is a partial or total surrender. Additionally, in case of a liquidity need, the policyholder can pledge the policy without triggering the underlying gains.

From a reporting perspective, even though it is a policy issued by an Irish insurer and hence a foreign asset, it is not necessary to include its surrender value in the Spanish Form 720 because the foreign insurer already reports it, thus simplifying the client’s tax obligations in Spain. Moreover, unit-linked life insurance is not also subject to the so-called Spanish ‘exit tax’, something particularly relevant to those families with international mobility needs. Finally, it is important to mention that all management, advisory and custody fees are exempt from VAT in Ireland, which results in additional savings for the investor.

Simplicity and customisation

Life insurance policies are easily and rapidly established in comparison to other more complex structures such as SIFs, SICAVs or trusts. However, this does not prevent the insurer from designing the structure and drafting specific and bespoke clauses for each policy, in accordance with the client’s own wealth planning and transmission needs.

Confidentiality and non-seizure

In Spain, life insurance is not part of the estate and it is paid to the beneficiaries nominated in the policy regardless of any will-derived complication. Additionally, the policyholder is not subject to any registration publicity and the insured amount cannot be seized even if there are claims from creditors or heirs as it must be paid by the insurer to the beneficiaries nominated in the policy. This guarantees an efficient and confidential transmission of assets to the next generation.

Asset protection

Irish law requires the segregation of unit-linked policy assets from those of the insurer and grants policyholders and beneficiaries an absolute preferential right over them against any other creditor’s claim. Likewise, the assets can be placed in a ring-fenced account with an independent custodian bank, in Spain or abroad. All of this is subject to strict supervision by the Irish regulator, thus offering a “triangle of security” that guarantees the maximum protection of assets.

International portability

As a long-term insurance-based investment product, a unit- linked solution can be easily adapted to the increasingly and frequent international mobility needs of clients.

In addition to being a vehicle used in asset management and wealth planning for the reasons stated above, unit-linked life insurance policies also offer very interesting advantages in terms of remuneration for executives, administrators and professional athletes.


The current economic and legislative environment is unsteady; possible legal changes are on the horizon following the inconclusive national vote in the Spanish general elections that has resulted in a split parliament with no clear governing majority. This, along with the complex demands of high net worth individuals, creates the need for stable wealth solutions. Irish unit-linked life insurance offers a comprehensive solution that is capable of achieving all the objectives and needs of asset management, wealth planning and asset transmission for private banking clients in Spain.

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Important: The information contained in this article does not constitute advice. Any tax, regulatory or product related statements made in this document are generic in nature and may not apply to individual requirements.

This article has been prepared for illustrative purposes only. Individual arrangements may differ depending on specific circumstances.