Protection of the taker

The Triangle of Security

Chart showing the framework of the security triangle.

For the policyholders of a life insurance policy, Luxembourg offers investor protection and security unique in Europe.

The system of protection, governed by the Luxembourg regulator for insurance and known as the "triangle of security", ensures the legal and physical segregation of investors' assets on one hand and those of shareholders and creditors of the insurance company on the other.

In practice, the assets associated with life insurance policies (known as "Technical Provisions") are deposited- separately from the company's other commitments - with a custodian bank approved in advance by the Insurance Commissariat.

The "triangle of security" is underpinned by a tripartite deposit agreement between the insurance company, the chosen custodian bank and the Luxembourg supervisory authority, the Insurance Commissariat.

The segregation of assets is monitored every 3 months by the Insurance Commissariat. In the event of the failure of the insurer, the supervisory authority can block the accounts underpinning and holding the Technical Provisions to protect the rights of subscribers.

Moreover, policyholders  have a special privilege granting them the status of the highest ranking creditors of the insurance company with a priority claim on the assets representing the technical provisions. This privilege of the subscriber, who ranks before all other creditors, whoever they may be, is aimed at giving policyholders priority to recover any claims relating to the execution of their insurance policies in the event of the failure of the insurance company.

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