Key Post Understanding Deemed Disposal on Life Insurance products

This has been discussed in many different threads with many diversions and confusions. I want to clarify the rules here.

It is about Life Insurance investment products. The calculations will be done for you but you need to know the calculations to understand the strategy around them.

This thread is not about ETFs or UCITs. Feel free to start a new thread on ETFs or UCITs.

This thread is not about the stupidity of the rules or what changes are expected. Again, feel free to discuss these in other threads.

My understanding is based on the Duke's clear explanation in the middle of this thread


The key to understanding it is that any Deemed Disposal tax paid after 8 years is paid on account and will be deducted from the final liability.

Can anyone link me to the Revenue's rules on this?

Deemed disposal at a profit

Note: Updated in light of subsequent posts correcting my initial example

Note: Updated in light of subsequent posts correcting my initial example.

Frequently Asked Questions

Q: I am unhappy with the Irish Life product I have as it's made a loss and the charges are too high. I want to switch to New Ireland. Can I set the loss on the Irish Life product against future gains in the New Ireland product?
A: No

Q: If I make a loss on a product, can I carry it forward against gains on other products?
A: No

Q: If I switch within a fund e.g. from equities to cash, is that a disposal?
A: No, assuming it stays within the same product which allows you to switch.

Q: Do I have to pay Exit Tax on my death?
A: Yes. The Life company will deduct it and pay the net amount to your estate.

A Comprehensive Guide to Life Assurance Exit Tax​

With accurate Exit Tax calculations for i) Maturity or Full Surrender ii) Partial Encashment ii) Full Encashment following a Deemed Encashment iii) Deemed Charge after a Top-Up and iv) Exit Tax credit interaction with Inheritance Tax (if applicable).

Plus, FAQs

And the interesting thing is that if Exit Tax is reduced to say 33% you get a refund of the 8% paid on DD.

Slightly off topic but can anyone explain to me why these investment vehicles are called “Life Insurance” products? I have one with Zurich which is doing well, but it is an investment, not life insurance.

Thanks

g

Folks

REad the first post.

This is not about UCITS or ETFs. It is about life policies.

It seems to me that my examples, which were after correction by others, are correct for life policies.

If they are different for something else, it's ok to note that but not to take the thread off topic.

So are my examples correct for life policies?
Are they correct for changing exit tax rates?

Brendan

Brendan Burgess said:

Folks

REad the first post.

This is not about UCITS or ETFs. It is about life policies.

It seems to me that my examples, which were after correction by others, are correct for life policies.

If they are different for something else, it's ok to note that but not to take the thread off topic.

So are my examples correct for life policies?
Are they correct for changing exit tax rates?

Brendan

Click to expand...

Yes they are. I would have liked to address @Corola's last post but I accept the TOR as set out in OP.

The UCITS discussion has been moved to