The modality has the potential to boost the Brazilian insurance market, but first it needs to face an intricate tax dynamics.
For those who work in the insurance industry or have any relationship with it, the term “universal life” is nothing new. Very popular in the United States, it emerged 50 years ago as an alternative to counter the decreasing sales of life insurance there. At that time, the traditional life insurance was not very competitive, as several applications and even private pension plans were more profitable.
Over time, “universal life,” or Universal Life Insurance, has undergone a number of adaptations in order to remain attractive. Compared to what it was when it was launched, the product changed substantially, but its name was already recognized by customers – and to this day it remains the same.
It went mainstream because it is advantageous for those who want not only the guarantee of compensation to the beneficiaries in the event of the insured’s decease, but especially the return offered as a long-term investment. It is a “two in one,” combining the main characteristics of life insurance with those of the pension plan.
Flexibility is the hallmark of Universal Life. It is an insurance that does not cancel the coverage if the insured needs to interrupt the payment of the premiums for a given time, since the customer can use the reserve fund itself to settle the mandatory premiums.
For a long time, the regulation of this product in Brazil has been underway. In 2017, we believed that its regulation was already in the final phase. The great impasse was – and still is – the tax issue, owing to the complexity of a product that combines capital accumulation, risk equity, and life insurance.
The discussion resurfaced this year, with a circular expected to be published by SUSEP (Federal Insurance Commissioner), the sector’s regulatory agency, by the end of December. The product had already been approved by the commissioner since 2016, with the validity of CNSP Resolution No. 344/2016, which establishes the rules for structuring, marketing, and operationalization of the product. The new circular is expected to provide for additional criteria for operation. As soon as the Federal Revenue Service resolves the tax impasse, the first policies should circulate through the domestic market in 2024.
Considering that only 17% of Brazilians over 18 years old have some life insurance coverage, according to data from Fenaprevi (National Federation of Private Pension and Life), this approval represents, for the market, an opportunity to reach different social strata.
For the economically disadvantaged, insurance offers not only protection but also savings. For those who have a high income, it is another alternative for diversifying investments.
Needless to say, a sound regulatory environment is key to ensuring the protection of consumer interests while providing stability and confidence to the market. However, we live in an economy where the only constant is change. So, agility is more than welcome, it is an imperative. We hope Universal Life will finally debut in 2024.
Available at: https://www.conjur.com.br/2023-dez-17/o-que-falta-para-o-seguro-de-vida-universal-sair-do-papel/
Autor: Gaya Lehn Schneider Paulino • email: gaya@ernestoborges.com.br • Tel.: +55 67 3389 0123
