📋 Tender Overview
Russia is preparing new tax breaks for savings, investment and shared life insurance policies (SLI, ILI and DSL). The Central Bank noted that the relief could be similar to what is currently in effect for IIS: exemption from income tax for long-term ownership of securities (from 10 years). The Ministry of Finance is preparing amendments to tax deductions for DSL, which will be in effect from 2025. In recent years, the Central Bank has consistently worked to increase the value of these insurance products and combated misselling, which was widespread in the 2010s. How profitable is it to invest in these products now and are there any pitfalls in them - in the Izvestia article.
How do IZH, NSZH, and DZH work?
The Central Bank supports the introduction of a new benefit for long-term life insurance policies, Nikita Teplov, Deputy Director of the Bank of Russia's Insurance Market Department, told Izvestia. He added that the regulator is participating in this discussion together with the Ministry of Finance.
ILI and NLI products provide life insurance and also offer the opportunity to accumulate or invest savings, usually for a period of three to five years or more. In some of these products, the level of profitability is fixed in the contract (i.e., the person will earn as much as is written in the papers), while in other cases, the profit will depend on the results of the company's investment of the client's funds.
Starting in 2025, a new instrument will also be launched in Russia — the Life Insurance Fund. It combines classic coverage and the ability to invest part of the contributions. Clients will choose where to invest their funds, but the list of permitted instruments will be limited to mutual investment funds. In fact, Life Insurance Fund will replace the Investment Life Insurance Fund, which will no longer be sold after 2025.
The new benefit for long-term life insurance policies should align their terms with those of other products, said Nikita Teplov from the Central Bank. At the same time, it is not necessary to return what was.
In July 2024, one of the tax benefits for investment life insurance and life insurance was cancelled. It allowed not to pay personal income tax on income from this product if it does not exceed the amount of the initial contribution multiplied by the average annual rate of the Central Bank for each year of the agreement.
For example, if a person invested 1 million and received, for simplicity of calculation, 2 million rubles a year later, then without this concession he would have to pay 13% personal income tax from 1 million of income - 130 thousand. At the same time, if the concession is applied, and the average annual rate of the Central Bank, for example, was 10%, then he would have to pay 13% personal income tax only from 900 thousand rubles (minus 1 million contributed, multiplied by 10%). That is, the fee would be 117 thousand rubles, explained Konstantin Asabin, head of the directorate of tax support for investment activities of the Alfa-Capital Management Company.
He added: according to the law, this concession will cease to be valid from 2025. That is, all products, regardless of the opening date, that end after the new year will not be able to receive this benefit for the entire period of the policy.
The innovation made the terms of life insurance contracts less favorable than other financial products, noted Vice President of the All-Russian Union of Insurers (VUS) Gleb Yakovlev. According to him, this needs to be corrected.
The change has already had a negative impact on sales and will reduce demand for life insurance policies in the future if the benefit is not returned, believes Andrey Martyanov, CEO of SK MAX-Life.
It is important to leave the previous concession at least for previously concluded contracts - this will help maintain confidence in the product, Gleb Yakovlev from VSS is sure. The new benefit should encourage citizens to take out long-term policies and thereby bring long-term money into the economy, he added.
What new tax breaks may be introduced for life insurance products
According to Nikita Teplov, Deputy Director of the Central Bank's Insurance Market Department, another concession could be introduced for long-term life insurance products. For example, for individual investment accounts (IIA), there is a concession that exempts from income tax after 10 years of ownership, he said.
IIS is a special investment account that allows the owner to buy securities on the stock exchange and at the same time receive tax benefits from the state. IIS-3 has been in effect since 2024. When opening such an account for a long term, the client is exempt from paying personal income tax on all income from this product. A person will also be able to receive a tax deduction for funds deposited into the account. Its maximum amount will be from 52 thousand to 60 thousand rubles annually, depending on the amount of the investor's income.
Exemption from income tax on life insurance contracts for a term of over 10 years will help convince many clients to take out long-term programs, believes Oksana Tikhanova, product manager of the personal insurance and travel insurance department at RESO-Garantiya.
However, a slow transition is envisaged for IIS, reminded the CEO of Sovcombank Insurance, head of the Sovcombank Insurance Group Igor Lappi. When opening an account in the next three years, to receive the benefit, the account must be owned for five years. Then this period will gradually increase to 10 (from 2031).
The life insurance benefit will differ from the IIS benefit also in terms of tax deductions, stressed Oleg Kiselev, CEO of Renaissance Life. He explained: for policies (with a term of five years or more), it can only be obtained from contributions of up to 150 thousand rubles, and this limit also includes expenses on education, treatment, and sports sections. And for IIS, the threshold is 400 thousand per year.
