Updated: Nov 21
In Cyprus, Life insurance not only serves as a protection for loved ones, but also provides valuable tax advantages. Any person working in Cyprus, who is obliged to pay income tax, can include in their tax declaration form (Taxisnet), every year, the Medical and Life Insurance expenses which count towards tax reduction.
Advantages for having a Life Insurance Policy in Cyprus:
Recognized by Cyprus Tax Authorities as a Tax Reduction Expense.
Can accumulate substantial cash value. It serves as a stable and tax-efficient financial safety net for emergencies, college education, retirement, and even as an opportunity for supplementary income.
Protects your loved ones and your business financially in case of need.
Provides extra coverage, if added in the policy, for serious disease, Permanent Total Disability, Emergency medical expenses and other medical benefits.
6 ways Life Insurance can help with tax reduction in Cyprus.
1. Tax-Free Death Benefit/ Estate Planning: Life Insurance can be used as an estate planning tool to pass on wealth to your beneficiaries. Life Insurance policies provide a tax-free death benefit to the beneficiaries upon the insured person's passing. This means the policy proceeds are not subject to income tax or capital gains tax.
2. Reduction in Annual Income Tax: Life Insurance premiums can provide tax reduction up to one fifth of the allowed annual taxable expenses.
3. Business Expense: If the policy is solely for the purpose of protecting business interests, the premiums may be considered as a business expense and can be deducted from taxable income.
4. Wealth Accumulation: Certain types of Life Insurance policies, such as investment-linked policies, offer a savings and investment component. The growth of cash value within the policy is typically tax-deferred, which means that you won't pay taxes on the investment gains until you withdraw them.
5. Pension Planning: Life Insurance can also play a role in pension planning. Contributions made towards pension plans with life insurance elements are eligible for tax relief, allowing you to reduce your taxable income.
6. Business Succession Planning: Life Insurance can be an integral part of your business succession plan. By utilizing a Life Insurance policy, you can provide the necessary liquidity to fund the buyout of a deceased owner's interest, ensuring a smooth transition while potentially benefiting from tax advantages.
The importance of Expert Advice when deciding a Life Insurance Plan
We pass through different stages in life, from single life to married life with children. Thus, each person and family have unique insurance needs which can only be analysed by a professional insurance consultant.
The most important step in deciding the right life insurance plan for you is to select a trustworthy and experienced insurance consultant who will guide you through the entire process, analyse your unique needs and advice the right insurance plan for you.
We, at HJS Insurance, are here to help you make informed financial decisions to harness the power of tax reductions through Life Insurance. We can prepare a complimentary Life Insurance offer and calculate your tax deduction through our insurance software during a quick online consultation.
Feel free to reach out to us to schedule a complimentary online consultation meeting or discuss any questions you may have regarding Life Investment Insurance for tax purposes.
Your trustworthy insurance consultants,