Everyone who wants to protect his or her spouse, cohabitant or children can take out life insurance. You can take out the insurance alone or in combination with your pension scheme.
Who will get your money?
You alone decide who will benefit under your scheme. If you have chosen that the beneficiaries should be your nearest relatives, they will be (in order of priority):
- your spouse, your civil partner or - subject to special requirements - your cohabitant
- your children and grandchildren
- the beneficiaries you have named in your will
- beneficiaries under the intestacy rules
Benefits and tax
Your survivors can choose to take the life insurance benefits as a lump-sum payment or as lower regular benefits. If the money is paid as a lump sum, it will be subject to 40% tax. Regular payments, on the other hand, will be taxed as personal income for your survivors. You can also choose to contribute taxed funds into your insurance plan, in which case the benefits will obviously be tax-exempt.
With a children’s pension plan, you can protect your children financially if you die before they come of age. You can set up a children’s pension plan either personally or under an occupational scheme with your employer. Everyone aged 18 and above is entitled to set up a children’s pension plan. If you die prematurely, your child will receive monthly benefits up to an agreed date of expiry or the date when the child attains the age of 24 years, whichever is earlier.
You have to set up a children’s pension plan for each child you want to protect. Benefits are treated as the child’s personal income. If the child’s income is below the Danish ”no tax” limit, the benefits will be exempt from taxation. The premium you pay for the insurance is deductible against your personal income.