Even those who subscribe to a branch 21 savings insurance with an insurance company under Belgian law, enjoy the protection of the Guarantee Fund. This applies just as with bank credits for the first tranche of 100,000 euros per person and per institution.
Jods Insurance with protective bank deposits
The protection of the Guarantee Fund against savings at the bank is well known. If a financial institution fails, the government guarantees that the consumer can recuperate his assets on the whole of current accounts, savings accounts and term accounts up to at least 100,000 euros per person and per institution.
Since 2008, there has been similar protection for funds invested in a branch 21 savings insurance policy with an insurer governed by Belgian law. This is a savings formula whereby the consumer receives a guaranteed basic interest rate, which can possibly be increased by a profit sharing if the reinvestment of his deposit and the financial results of the insurer allow this.
Initially, the protection was limited to the balances on branch 21 savings insurance policies with companies that consciously opted for it and also paid a contribution for it. Since 1 January 2011, all life insurers are obliged to pay an annual contribution to this Guarantee Fund.
The protection on the branch 21 savings insurance applies just like on the bank balances on the first bracket of 100,000 euros per person and per institution.
If the insurance company is no longer able to meet its commitments, the Guarantee Fund will intervene within a period of three months. In exceptional circumstances, the period can be extended three times.
Transfer or surrender
With the intervention of the Guarantee Fund, the consumer has the choice between a transfer of his savings insurance to another life insurer and the payment of the surrender value. With a surrender the contract is terminated and the money is repaid. If this happens within eight years after the first payment, a withholding tax of 30% is deducted from the proceeds. In addition, the tax authorities assume that each payment raised 4.75%, even though this is actually less. This tax penalisation can be avoided by transferring to another company.
The guarantee scheme does not apply to deposits on branch 23 investment insurance policies, the proceeds of which are linked to those of investment funds. It also does not apply to group insurance and to supplementary pension formation for the self-employed.
Not for foreign insurers
In contrast to the deposit guarantee for bank balances, that for savings insurance is not regulated at European level. It therefore does not necessarily apply to foreign insurers, even if they offer products on the Belgian market.