Whole life insurance in Cyprus in 2024. A complete guide for whole life insurance.

Whole life insurance in Cyprus

Buying life insurance can be a lifeline for you and your loved ones. It protects your dependents (spouse and children) from significant financial losses that could result if something unexpected happened to you.

It provides financial security and helps to pay off mortgages, living expenses, such as tuition for your children, and any medical or final expenses.

Whole life insurance is more than simple life insurance since it also helps you save money for your pension or a rainy day.

In this guide, we will help you to understand how whole life insurance works in Cyprus.

We will explain its main characteristics and support you in picking the best plan according to your insurance needs and budget constraints.

Table of contents

What is whole life insurance?
How does whole life insurance work in Cyprus?
Whole life insurance tax deductible
Whole vs term life insurance
The benefits of whole life insurance
Whole life insurance cost in Cyprus
Affordable whole life insurance in Cyprus
Best whole life insurance in Cyprus
Whole life insurance quotes in Cyprus

What is whole life insurance?

Whole life insurance is a type of permanent life insurance that can provide lifelong coverage.

In Cyprus, this type of insurance is also known as unit-linked or saving insurance.

Whole life insurance combines a savings account known as “cash value” with a traditional life insurance component.

If you pay the premiums, your beneficiaries can claim the policy’s death benefit when you pass away.

Practically, the insurance premium of whole life insurance is separated into two categories:

The non-refundable amount for the life insurance death benefit (mortality cost) which is lost.
The amount for saving purposes.

In Cyprus, whole life insurance policies exclusively guarantee the death penalty amount. The savings amount is invested in saving funds that we will analyse below.

Apart from offering significant tax deductions, whole life insurance can ensure a lower risk and a higher net return than certificates of deposits.

How does whole life insurance work in Cyprus?

Whole life insurance in Cyprus is categorised within “unit-linked funds” or saving and investment units.

Insurance companies create these funds where they gather the investors’ money and place them in international investment banks and companies (e.g. JP Morgan, Credit Suisse, The Vanguard Group, Pimco etc.) that are responsible for investing the sum into various savings and investment products.

Investors can put money into a diverse range of investments than if they were to invest on their own, as they can buy units (shares) of the investment funds mentioned above.

The saving units’ cost depends on the value of the investors’ financial and deposit products.

The goal of each fund should be considered when deciding what products to invest in.

The common goals set by savings funds are divided into three categories:

Low-risk (low fluctuation): Conservative
Medium-risk (medium fluctuation): Moderate
High-risk (high fluctuation): Aggressive

The most popular option out of the three, the conservative (or low-risk funds), place investors’ money into certificates of deposits and government bonds (i.e. treasuries) with a high solvency rate (>AA+) which results in minimum fluctuation.

Insurance companies are obliged to regularly update their clients on the value of the investment units and the funds’ investment policy. The same information must also be published in private Cyprus newspapers.

For a more analytical presentation of saving and investment funds, you can click here.

If you want to read the usual terms of whole life insurance, you can click here.

Whole life insurance tax deductible in Cyprus

All whole life insurance contracts in Cyprus are tax deducted.

In general, 20% of taxable income in Cyprus can be exempted from taxation (currently expected to increase to 25% in 2024).

The eligible expenses for tax exemptions are:

Social insurance contributions.
General health system (GESY) contributions.
Private medical insurance premiums (maximum 1.5% of salary).
Provident fund and pension contributions (maximum 10% of salary).
Life insurance premiums (maximum 7% of the death benefit).

We’ll use a simplified example to explain this calculation and consider an individual with the following characteristics.

Salary	€70,000
Social insurance contributions	€4,500
General health systems contributions	€2,000
Life insurance annual premiums	€8,500
Life insurance insured sum	€100,000

Whole Life Insurance Cyprus, Tax Deductible

Since he does not have other sources of income (i.e. rent), his total net income is €70,000.

Government expenses eligible for tax exemptions = general health system contributions + social insurance contributions = €2,000 + €4,500 = €6,500.

Eligible tax exemptions: 20% of the net income is 20% * €70,000 = €14,000.

Then, deduct eligible tax exemptions from the Government expenses eligible for tax exemptions = €14,000 - €6,500 = €7,500.

Technically, this means that €7,500 is usable for life insurance premiums.

Nevertheless, €7,500 should also incorporate the eligibility criterion of 7% to be fully tax-exempted.

Eligibility criterion of 7%: For tax insurance purposes, it’s possible to use only 7% of the insured amount. The insured amount is €100,000, and 7% is €7,000 (which is less than €7,500).

Therefore, €7,000 is the deductible amount from the taxable income, not the €7,500 or €8,500.

The total deductible exemptions from the applicant’s income are as follows:

General Health System + Social Insurance Contributions + Life Insurance Premiums (limited to the 7% of the insured amount) = €2,000 + €4,500 + €7,000 = €13,500.

Therefore, the taxable income is €70,000 - €13,500 = €56,500.

If he wanted €7,500 to be deducted from his taxable income, then his life insurance insured sum should be increased to €107,000 (7% of €107,000 = €7,500).

If you want to calculate the ideal savings amount for maximum tax exemption, use our online calculator here.

Whole vs term life insurance

Comparison Table:

WHOLE LIFE INSURANCE	TERM LIFE INSURANCE
Coverage lasts your entire lifetime	Coverage lasts for the length you want (5, 10, 15, 20, 30 years) with a maximum age of 70.
Expensive	Inexpensive
Cash value component	No cash value component

Whole life insurance, term life insurance and their close variants are the only types of insurance provided in Cyprus.

Their main difference is that term life provides coverage for a specified time (as defined in a contract), while whole life insurance provides coverage for the applicant’s whole life.

Also, whole life insurance has a cash value component, while term life insurance doesn’t. This component is the reason why the latter is significantly more expensive.

How to choose between term and whole life insurance Cyprus?

Both insurances have positives and negatives, but that's subjective and dependent on your needs.

Whole Life Insurance Cyprus

We suggest you choose whole life insurance if the following suits you:

You can comfortably afford higher premiums. Whole life insurance is a lifetime commitment, so ensure it’s affordable for you. If you miss your payments, your policy could lapse, and you will lose money.
You want coverage that lasts your lifetime. The death benefit typically pays out when you die, and the payout will go directly to your beneficiaries and not through your estate.
You have a dependent who needs lifelong care, like a child with disabilities. Life insurance can fund a trust for your child’s care when you’re gone. Before setting up a trust, consult with an attorney and financial advisor.
You want life insurance for pension insurance or saving purposes.

Term Life Insurance Cyprus

We suggest you choose term life insurance if the following works for you:

You only need coverage for a specific amount of time. A term life policy can provide income if you pass away, leaving your financial obligations behind, such as paying off your mortgage or raising children.
You want affordable coverage. Term life is the cheapest option, especially if you’re young and healthy.
You might want whole life insurance but can’t afford it right now. Acquire a decreasing life insurance policy.
You don’t want to accumulate a cash value with your life insurance. Buying an inexpensive term life policy allows you to pay for only what you need and can invest the money elsewhere.

The benefits of whole life insurance in Cyprus

Whole life insurance plans have become particularly popular in Cyprus in the last decade.

Based on statistics by the Superintendent of Insurance in Cyprus, over 65% of professionals with an income of over €40,000 use whole life insurance for tax exemption or saving purposes.

The main advantages of whole life insurance as a saving or pension plan are:

Prudent and highly professional management.
Discipline when it comes to saving for a long-term goal.
Flexibility and ability to have immediate liquidation.
Tax deductions.

On the other hand, saving via whole life insurance in Cyprus should always be done under the guidance of professional investment advisors due to certain risks that may arise.

Indicatively, the most significant risks are:

Market risk.
Capital consolidation risk.
Liquidation/Settlement risk.
Inflation risk.

If you want to find out about the benefits and risks of these plans, you can read our article here.

Whole life insurance cost in Cyprus

Whole Life Insurance Cyprus cost

The cost of whole life insurance in Cyprus is defined by the following factors:

Age. The higher the age, the higher the cost.
Gender. Women pay less than men due to their higher life expectancy.
Pre-existing health conditions.
Past health conditions. Past medical conditions might affect the value of the insurance depending on the severity of the disease. For example, if you had cancer in the past, even though you fully recovered, insurance companies might refuse to insure you or increase the premium significantly.
Death benefit amount. The maximum limit of coverage (death benefit) that someone can request is limited by age and income. Requesting a high death benefit should be justified by a high income.
Saving amount. You should ask, what is the amount you want to save per month? A licensed insurance adviser can help you define the amount you want to save.
Medical history of parents. If your parents suffer from pre-existing conditions, such as a stroke, heart attack, inherited diseases, or died when they were young, the premium will also be higher.
Weight. Obese and overweight people (in line with the BMI ratio) face increased premiums.
Smoking and drinking alcohol regularly increase insurance premiums.
Additional benefits (i.e. riders) also increase the cost of the insurance (i.e. life insurance, critical illness coverage, permanent disability benefits etc.)
Dangerous and extreme sports increase premiums (e.g. skydiving, bungee jumping, mountain climbing, canyoning and diving).

Affordable whole life insurance in Cyprus

Compared with other European countries, term life insurance premiums in Cyprus are comparatively low.

The insurance industry in Cyprus is up and coming, so insurance companies want to give incentives, especially to young people and people in business, to insure their life.

Cyprus insurance products are also not levied with VAT, meaning insurances are comparatively lower.

Finally, term life insurance policies are recognised as tax exemptions for individuals and companies.

Affordable Whole Life Insurance Cyprus

Pitsas Insurances can support you in buying the most affordable whole life insurance in Cyprus.

Best whole life insurance in Cyprus

Pitsas Insurances cooperates with the largest life insurance underwriting companies in the world.

Our plans have significant advantages in comparison with the competition, namely:

The savings funds are managed by the largest fund managers in the world, Pimco and The Vanguard Group.
Full transparency. The prices of the units are published in online newspapers. We prepare an annual report with the value of your savings units.
Free advice from awarded tax planners with huge experience in the field.

Whole life insurance quotes in Cyprus

Pitsas Insurances cooperates exclusively with reputable international underwriters and can help you compare the best whole life insurance quotations.

Our savings funds are managed by the largest investment companies in the world, The Vanguard Group and Pimco.

Online whole life insurance in Cyprus

For more information about our life insurance products, see here.

Complete our online quotation form and one of our specialised life insurance consultants will communicate with you soon.

Whole Life Insurance Cyprus

See our website to find out more about our saving and investment programs.

Pitsas Insurances Team