Unit-linked policies and demographic risk: aspects to consider.

Unit-Linked policies are an important issue inlife insurance ,particularly with regard to their legal classification and the applicable tax regime.Recent rulings by the Court of Cassation (judgments nos. 11387/2025 and 21022/2024) have reaffirmed the importance of 'demographic risk as a determining factor in recognising such contracts as genuine life insurance policies, with the resulting civil and tax benefits.

Demographic Risk
Demographic risk refers to the possibility that the insured person's life expectancy will differ from the demographic average. This risk is assumed by the insurer, whose economic result depends on the discrepancy between the actual and statistical life expectancy of the insured person. If death occurs early, the amount paid to the beneficiary will be higher, resulting in a reduction in the insurer's profit margin; conversely, the advance payment guarantees a social security function for the beneficiary.

For a contract to qualify as life insurance, the insurer's benefit must be linked to a future event relating to human life and the insured person must be granted a sum that is not simply related to the financial risk. In its 2024 ruling, the Court of Cassation examined a unit-linked policy in which the single premium paid was invested in units of a managed fund, linking the insurer's benefit to the returns obtained. In the event of the insured's death, the beneficiary received 101% of the value of the units. The mere return of the premiums paid, the countervalue of the assets or the payment of a minimum surcharge did not satisfy the demographic risk requirement for a genuine life insurance policy.

Therefore, if a contract formally defined as 'life insurance' allows the beneficiary to receive no compensation in the event of the insured's death due to poor investment performance, the contract cannot be considered as such within the meaning of Article 1882 of the Italian Civil Code.

In order for a unit-linked policy to qualify as life insurance, it is essential that the insurer assumes a risk that is effectively linked to the life of the insured. Without this element, the contract loses its insurance nature and is treated as a financial investment tout court.

Tax implications and operational aspects

The correct classification of the contract has a direct impact on the applicable tax benefits. Sums paid under policies recognised as life insurance are unseizable and exempt from seizure (Article 1923 of the Italian Civil Code) and exempt from inheritance tax (Article 12 of Legislative Decree 346/90). Taxation is also deferred until redemption (tax deferral).

If the contract does not meet the demographic risk requirement and is classified as a financial investment, these protections do not apply, exposing the policyholder to additional risks in terms of both assets and taxation. It is therefore necessary to carefully assess the structure of the policy before signing, verifying the actual presence of a substantial demographic risk.

Conclusions

In summary, anyone intending to take out a unit-linked policy must ensure that it has the characteristics required to qualify as life insurance in order to benefit from the regulatory and tax advantages provided.

The Firm remains available for further clarification.