How to fix life insurance 3a?

The crooked life insurances 3a has been already extensively discussed on this forum. I think we all agree that those products are in no ways beneficial to the policy holder.

What I find concerning is that there is a legal framework to enable those products. Especially putting into perspective that we may face issues to fund pensions in a few decades, I find disturbing that we let insurer to gorge themselves on tax-deductible premiums.

What do you think would be the best way to fix the problem from a legal point of view?

My proposal would be to make the part of premiums used to finance the life insurance not tax-deductible. This would in practice force the insurers to be transparent on the split of life insurance vs retirement capital savings of the premiums.

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I think educating the public about the facts is much more beneficial than imposing regulations.

The fact is, it is theoretically possible to create favorable permanent life insurance products which could compete with other financial products. But this will only happen as more transparency and competition is brought to the market.

We’ve seen this development with mutual funds, with ETFs introducing much more transparency and lower costs. Conventional asset management services too are evolving into cheap, transparent robo advisors. This didn’t happen because of regulations on TERs or asset-management fees.


In my point of view the proposal above would not introduce more regulations. It is also miles away from regulating fees and/or the structure of those products directly. It would bring however more transparency.

One could argue that today tax deductible structure favours the combined product over taking a life insurance and retirement capital saving plan separately. Why should that be the case?

Why does the tax favour the combined product? You can deduct the same amount from taxes, whether you have a combined product or separate products.


It is not always possible to deduct the same amount for a standalone life insurance since in practice the deductible can be maxed out by the health insurance premiums alone.

But point taken, it is only that threshold which makes the life insurance premiums “not deductible”. It can and actually will increase.Thus, my initial proposal is silly.

What about making each component of the combined products premiums deductible in their respective bucket?
The split of the premiums contribution to each component would then have to be reported transparently.