Unit Linked Policies Insurance Nature

Through time, jurisprudence has been called upon to settle three main issues : a) whether a linked policy is valid where the demographic risk is totally absent or irrelevant; b) whether a linked policy where the demographic risk is present but not prevalent can still be classified as an Insurance transaction on the basis of the supervisory regulations with particular reference to Regulation and Distribution; and finally c) whether or not a linked policy can truly be considered Life Insurance and, therefore, receive the protection referred to in art. 1923 civil code.

With regard to the first question, the Legitimacy jurisprudence of the Supreme Court of Cassation clarified that in linked policies, characterized by a mixed causal component of Financial and Life Insurance, even where the Financial cause is prevalent, the compliance of the part qualified as Insurance must be consistent with the principles dictated by the Civil Code, the Insurance Code and by the secondary legislation connected to them.

Particular attention is to be given to the demographic risk factor in verifying the extent of the insurance coverage, which is deducible from the amount of the premium paid by the policyholder with respect to the guaranteed capital, considering the Investment Time Horizon and the Investment Type.

With regard to whether a linked policy qualifies as an Insurance Transaction when the demographic risk is present but not prevalent, the European Court of Justice with the sentence of 24 February 2022, specified that these contracts, despite their dominant Financial nature, always remain Life Insurances.

The opinion of the Euro-Union judges in  particular states that linked policies are to be classified as Insurance contracts.

According to the Court in order for a contract to qualify as such, it is sufficient for an Insurance company to undertake to provide a benefit upon the death of the insured or on the occurrence of another event covered by the policy , in exchange for the payment of a premium by the insured . Therefore, these minimal requirements allow them to qualify as Life Insurance contracts within the definition of Directive no. 2002/83.

The position taken by the European Court of Justice with regard the qualification of linked contracts as being undoubtedly of an Insurance nature inevitably has repercussions on the applicability of these products to the code provisions pursuant to the art. 1923 civil code, although up until now a section of jurisprudence has been inclined to exclude it.