The tax advantages that life insurance offers you

Life insurance protects you and provides financial stability for you and your family in the event of an unexpected event. Usually the acquisition of this type of protection products is accompanied by a need based on the economic responsibility that any individual has with their loved ones.

Life insurance can be complemented with additional policies that respond to the needs of each client: educational insurance, personal accident insurance, pension and retirement insurance, etc. In the latter case, when MetLife life insurance has a retirement purpose, it not only offers you an alternative to accumulate capital for the future, but also represents a tax advantage according to Colombian law:

“For income and complementary tax purposes, contributions made by sponsoring or employer entities to retirement and disability pension and severance funds are deductible. 

“The voluntary contributions made by the worker, the employer, or the contributions of the independent participant to the private pension insurance, to the voluntary and mandatory pension funds, administered by the entities supervised by the Financial Superintendence of Colombia, will not be part of the basis for applying the withholding tax and will be considered as an exempt income, up to an amount that added to the value of the contributions to the Savings Accounts for the Promotion of Construction (AFC) referred to in article 126-4 of this Statute, does not exceed thirty percent (30%) of labor income or tax income for the year, as the case may be, and up to a maximum amount of three thousand eight hundred (3,800) UVT per year. “Article 126-1.

“The indemnities received by the beneficiary of life insurance, regardless of the amount, are exempt from income tax and occasional gains.” Article 223, Tax Statute of Taxes Administered by the General Directorate of National Taxes.

For the above, the policyholder must comply with the requirements that allow him to apply the tax advantage related to his contributions to retirement insurance: Plan 57, Plan 62 and Pension Plus in the case of the products offered by MetLife Colombia; The requirements are:

  1. The compensation will not be taxed with the rate applicable to occasional earnings if said amount does not exceed twelve thousand five hundred (12,500) UVT.
  2. Contributions to the pension insurance must be paid for a minimum period of ten (10) years, except in the case of compliance with the requirements to access the old-age or retirement pension and in the case of death or disability that entitles you to pension.
  3. That the withdrawals of voluntary contributions are destined to the acquisition of housing, whether or not it is financed by entities subject to the inspection and surveillance of the Financial Superintendence of Colombia, through mortgage loans or housing leasing.

With the above, we evidence that the contributions made to a policy with a retirement objective will not be part of the basis for applying withholding tax and will be considered as an extra income and after complying with the requirements set out in the previous points, part of These contributions will be considered as an occasional gain, which will allow the policyholder to build a capital that will ultimately benefit him and his loved ones.

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