In the framework of life insurance products, you often hear about concepts such as branches 21, 23 and 26. But what is the difference between the three?
Branch 21 insurance provides you with a guaranteed return, with a possible bonus. The bonus is not guaranteed: it depends on the results of the insurer. The guaranteed return is currently situated between 0.1 and 1% for most insurers. Certain insurers also offer branch 21 policies with a guaranteed return of 0%. This does not mean that your return will end up being nil, otherwise you would not have taken out such a policy. The return on these policies is generally higher, with a guaranteed interest rate of 0.5%, because the investment policy of the insurer is slightly more dynamic in this framework. You must therefore make a choice: a guaranteed return or not, with the perspective of a slightly higher return.
Branch 21 life insurance may allow you a tax benefit. You can also take out additional guarantees, such as death or disability coverage.
A branch 23 solution does not offer a guaranteed return. The return depends on the investment funds which this policy is linked to. If these funds achieve good results, your return will be good. But in the opposite case, you risk losing part of the invested capital. This is not always the case, however, as certain branch 23 products are offered with capital guarantees.
It is important for you to know where your money is invested in the case of a branch 23 policy. Ask for professional advice from a broker, who can compare the policies from different companies. It is also worthwhile to know what it costs to make a transfer between underlying funds. In this way, you can adapt your investment strategy when the results do not meet the objectives.
A branch 26 policy offers a guaranteed return. But the main advantage of the product is that you do not pay a 2% tax on the premiums, which is the case for branches 21 and 23. However, you must pay a withholding tax of 30% on the return. This will of course impact your return.
While a branch 26 product is a life insurance policy, it does not, however, resemble traditional insurance. There is neither an insured party nor a beneficiary. It is a capitalisation contract.
Companies and associations may also take out a branch 26 policy.