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GLOSSARY

Deferral

Deferral is the postponement of the payment of a benefit, annuity or insured sum until a previously agreed future date. This means that the insured person or beneficiary does not receive the benefit immediately, but rather it is paid out after an agreed period of time has elapsed, which allows for better financial planning and, in many cases, optimises the product’s return or tax treatment.

Here are some examples of deferral in insurance:

Life insurance with savings or investment components: with these products, the policyholder can agree that the accumulated capital will be paid out at a future date, such as on retirement.

Deferred life annuities: a person takes out a life annuity but decides that the annuity payments should begin in several years’ time. During the deferral period, the money remains invested and may earn interest.

Deferred lump sum: in this case, the insurer pays a lump sum to the policyholder only if they survive to a specified future date. If the insured dies before that date, no payment is generally made.

What are the advantages?

It allows the policyholder to choose the most appropriate time to receive the benefit, tailoring it to their personal circumstances or tax situation.

During the deferral period, the lump sum can continue to generate returns.

It can help with retirement planning or the timely transfer of assets to heirs.

Do you know what types of deferrals are available?

Deferral of the benefit: the payment of the capital or compensation is made on an agreed future date, not immediately following the insured event.

Annuity deferral: the start of periodic annuity payments is postponed until a future date chosen by the policyholder.

Deferral of the premium: payment of the insurance premium is deferred and takes place at a date after the policy has been taken out.

Sources:

Spanish Tax Agency
BOE
Reports and publications from the Directorate-General for Insurance and Pension Funds (DGSFP)

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These materials are for information purposes only and are intended to help readers gain a better understanding of financial concepts and management. These materials do not constitute investment advice, nor do they constitute an offer or invitation to buy or sell. The content is based on sources of information considered reliable at the time of writing. The information provided is subject to change without notice. AXA makes no express or implied warranty regarding the accuracy, suitability, or completeness of this information.