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Life Insurance Is a Global Leader, but Still Faces Barriers in Brazil. While Life Insurance Dominates the International Market, It Faces Limitations in Brazil Due to Taxation and a Lack of Modernization in Products.
Life insurance moves trillions of dollars in developed countries, leading the global market for protection and long-term savings. However, in Brazil, this segment has not yet achieved the same prominence, mainly due to tax barriers and a lack of products comparable to those offered abroad.
According to a report by Estadão, the Federal Revenue Service resists creating modern models similar to “Universal Insurance,” a common practice in Europe and the United States. The taxation on life insurance with savings undermines its competitiveness, driving consumers away who seek more profitable alternatives.
What Are Life Insurance Policies
Broadly speaking, life insurance includes life insurance, health plans, dental plans, and open complementary pensions. These products serve a dual purpose: financially protecting the insured and serving as a savings instrument for the long term.
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In developed countries, it is common for life insurance to include components of interest-bearing savings, allowing the policyholder to withdraw values while alive, in addition to coverage in the event of death. This transforms the insurance into a strategic mechanism for wealth protection.
How Much Does This Sector Move in Brazil and Worldwide
Globally, life insurance accounts for the largest share of the sector, managing reserves that support public debts and long-term investments. In Brazil, although the segment is also the main source of revenue, especially with health plans, its evolution is still limited.
The VGBL (Beneficiary Generating Life Insurance), for example, is currently the main product of open complementary pensions in the country. It functions as a life insurance with savings, but still faces restrictions that hinder greater adoption.
Why Is Brazil Behind in This Market
The main impasse lies in the taxation imposed by the Federal Revenue Service. While pension plans enjoy differentiated taxation, life insurance with savings faces higher burdens, reducing its appeal compared to other financial investments.
Experts point out that the lack of political incentive and the short-term vision of the government hinder the expansion of more modern products. In practice, Brazilian consumers end up with fewer investment and protection options compared to countries like France, Germany, and the United States.
Is It Worth Buying Life Insurance in Brazil?
Even with limitations, life insurance holds great relevance in the country. Health and dental plans are essential for millions of Brazilians, and private pension plans remain one of the main alternatives for supplementing retirement.
However, the absence of more sophisticated models aligned with the international market reduces the competitiveness of the sector and limits the financial security of the population. The creation of a universal insurance could increase resource capture and strengthen the social protection system in Brazil.
Life insurance is already a global leader, but in Brazil, it still faces obstacles that hinder its expansion. The dispute among insurers, the government, and the Federal Revenue Service places the need to offer fairer and more modern products for society on the back burner.
And you, do you think that taxation is a barrier to the advancement of life insurance in Brazil? Share your opinion in the comments; we want to hear from those who live this reality every day.
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