Today I want to talk to you about a matter of extreme interest and importance, that is, the deductions of the expenses that you possibly incur when you take out life insurance. The question is not easy to understand: the law sets particularly stringent limits as regards the type of insurance and above all the sum that can be deducted.
In today’s guide, I will try to shed some light on the question: how much of the premium you pay can be deducted from the personal income tax? How much can you save? What type of insurance do you need to choose to get deductions on life policies?
Let’s see it together, in a guide that will help you save money and, above all, choose the policy that best suits you.
Only “real insurance” is covered
First of all, it should be noted that the legislator has imposed particularly stringent limits for the type of insurance that can then be subject to deduction.
In fact, only those policies that have as their object the risk of death or the risk of permanent disability can be deducted, for a total percentage that must not be less than 5%.
This means that policies that do not provide effective insurance coverage against accident or death, cannot be subject to deduction.
This is a very important issue, which allows us to reconstruct, at least in part and thanks also to the help of the judiciary, the actual legal situation of life insurance policies: in fact, the Italian system seems to make more and more difference between policies actually insurance and speculative policies, with the latter being assimilated, for many situations (see also foreclosure) to real investments.
In a nutshell, the policies that can be deducted are:
- Life insurance policies;
- Accident policies;
- The so-called Long Term Care policies;
- The policies for the risk of non-self-sufficiency.
According to the extended discipline, policies against natural disasters can also be added, which however cannot be the subject of today’s discussion.
How much can you deduct?
The maximum guaranteed deduction is 19%, up to a maximum of 530 euros per year. This means that if 19% of the premiums paid during the year do not exceed € 530, you can deduct the entire 19%, while otherwise you will be forced to “settle” for a deduction of € 530.
However, the policies stipulated before 2000, in the event that they have a duration of at least 5 years and without the possibility of granting the loan, can be fully deducted.
Insured and insurances with additional benefits
The general rule, as always happens in the Italian legal system, however, is not valid for all cases. In fact, there are specific cases that allow you to obtain much more important deductions, such as:
- Policies for people with severe disabilities: the maximum ceiling rises to 750 euros’ deductible each year;
- Long TERM CARE insurance and risk of non-self-sufficiency: 19% tax deduction, up to a maximum of 1,291 euros each year.
Who is the person benefiting from the deduction?
Those who actually pay the premium benefit from this, as long as the insured person is himself, or a person who is fiscally dependent (the typical example is that of children, or that of a wife who is unemployed).
It is not possible to shift the “deductibility”: who pays or the insured, provided that, in the first case, it is precisely subjects who are not economically independent and are the tax burden of the person who pays the insurance and the related premium.
The codes for the deduction
To obtain the deduction it is necessary to obtain the relevant documentation from your insurance company, and then indicate in the 730 forms:
- Code 35: is the code relating to life and accident policies that were stipulated by December 2000;
- Code 36: is the code for life and accident insurance policies from 2001 onwards;
- Code 37: it is the code that instead relates to the Long Term Care policy.
The panel to be used is the RE, respectively from E8 to E12.
As for the UNICCO model, the boxes to be used are RP, RP8, and RP14.
How to be sure that insurance is entitled to the deduction
There are some small steps you need to put into practice to make sure that the policy you have chosen can be used for deduction purposes:
- Check the actual content of the policy: is there protection against death or against injury?
- Request the documentation from the insurance company even after taking out the policy: prove the premiums paid and the amount you can request supplied;
- Ask your accountant for help: especially if your tax return is complex, it is not advisable to do it yourself, also taking into account the complexity of Italian tax laws.
Before saying goodbye, after having dealt with this delicate and important issue, I remind you that on My Business you can find many reviews on life policies.