Life insurance as a planning tool

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Life insurance has long been a planning instrument for wealthy families in continental Europe. A unit-linked life insurance policy, in which the policyholder's premiums are invested in a portfolio of assets held by the insurer, can offer advantages in succession planning, asset protection and taxation, depending on the law of the policyholder's country of residence. Insurance companies in Liechtenstein, Luxembourg and Switzerland have developed products for this market, often called insurance wrappers or private placement life insurance. The assets are frequently managed by a Swiss bank as custodian or asset manager.¹

The use of insurance wrappers requires care. Their tax treatment depends on whether the policy qualifies as life insurance under the law of the policyholder's residence, which in Germany, for example, requires a minimum death benefit and limits the influence of the policyholder on the investment of the assets. A policy that does not meet these requirements may be treated as a transparent investment, which eliminates the tax advantages and can lead to tax criminal proceedings if the income was not declared.² The author, whose doctoral thesis examined the prospectus liability of life insurers, has advised on a number of such structures and has seen both the legitimate uses and the misuses of the instrument.

Notes

On unit-linked life insurance (fondsgebundene Lebensversicherung, private placement life insurance) as an instrument of cross-border wealth planning and the role of insurers in Liechtenstein, Luxembourg and Switzerland, see the specialist literature. To be verified. ↩
On the requirements for the recognition of unit-linked life insurance policies for German tax purposes (§ 20 para. 1 no. 6 EStG, minimum death benefit, prohibition of direct investment control by the policyholder, "Vermögensverwaltende Versicherungsverträge", § 20 para. 1 no. 6 sentence 5 EStG), see the German tax literature. To be verified. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

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Life insurance as a planning tool

Notes

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