Polisat Hisachon (פוליסת חיסכון): Flexible investment across different tracks
Despite its misleading name, a Polisat Hisachon (פוליסת חיסכון) is not insurance in the traditional sense: it includes no death or disability benefits. It is a liquid investment product managed by insurance companies, allowing you to invest in the capital market without committing to a fixed term.
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How does it work in practice?
With a Polisat Hisachon (פוליסת חיסכון)An investment product managed by insurance companies, offering full liquidity and the ability to switch between investment tracks without creating a taxable event., the insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment. company acts as your "portfolio manager." You deposit money, and it invests it in the investment track you selected.
- Flexible deposits: Unlike a Kupat Gemel LeHashkaa (קופת גמל להשקעה)A flexible savings vehicle that allows withdrawal at any time, or receipt of a tax-exempt pension after age 60., there is no annual deposit limitThe maximum amounts that may be deposited into certain savings products in order to receive tax benefits.. You can deposit any amount as a one-time deposit, through a standing order, or a combination of both. This makes the product suitable for investing large sums, such as inheritance funds or proceeds from the sale of an asset.
- LiquidityThe speed and ease with which money can be withdrawn from an investment and converted into cash in a bank account without significant penalties.: The money is fully liquid. You can withdraw all or part of it at any time, within a few business days and without exit penalties.
Investment tracks: choosing the level of volatility
You can choose from a range of investment tracks according to the level of risk that suits you:
- Equity track: High exposure to stocks, high volatility, and the potential for higher returns.
- General or balanced track: A combination of stocks and bondsA type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest. at a moderate risk level.
- Conservative track: Lower exposure to stocks and relatively low volatility.
Taxation: when do you pay?
Similar to a Kupat Gemel LeHashkaa (קופת גמל להשקעה), a Polisat Hisachon (פוליסת חיסכון) offers the Tax-deferral effectThe economic benefit created when money that would otherwise have been paid as tax remains invested and continues to earn returns over the years.. As long as the money remains within the policy, no tax is paid on the accumulated gains.
- Upon withdrawal: You pay capital gains tax at a rate of 25% only on the real gainThe actual gain remaining from an investment after deducting the rate of inflation.—that is, the gain beyond the increase in InflationA process of general price increases that reduces the purchasing power of money (the same amount of money buys fewer products)..
- Switching companies: Switching from one insurance company to another generally requires redeeming the policy, paying capital gains tax, and opening a new policy with the other company.
Advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Professional management: The money is managed by a large, regulated insurance company. | Management fees: Management fees may be relatively high compared with other alternatives and may affect returns over time. |
| Full liquidity: You can withdraw the money at any time without exit penalties. | Volatility: The value of the investment may rise or fall depending on capital market conditions. |
| Tax deferralThe ability to pay capital gains tax only when money is withdrawn from the plan, rather than when the gain is generated.: As long as the money is not withdrawn, no tax is paid on the gains, and the money continues to accumulate. | No tax benefit for annuity withdrawals: Withdrawal as an annuity is not tax-exempt. |
| Simple administration: The opening, deposit, and monitoring processes are simple and do not require opening a trading account. | Limited control: You do not personally choose the securitiesA general term for a tradable financial asset (such as a share, bond, or unit in a fund) that represents a right to an asset or to profits. that make up the portfolio. |
| Loan option: In some cases, you can obtain a loan on relatively favorable terms against the accumulated funds. | Switching companies involves a Taxable eventAn action in an investment portfolio (such as selling at a profit) that triggers an immediate tax payment to the state.: You generally cannot transfer the policy to another company without redeeming the investment and paying tax. |
The bottom line
- What is it?
- A managed, simple, and highly liquid investment product.
- What is it not?
- A substitute for conservative bank savings or a risk-free investment product.
- Who is it suitable for?
- Those who want to invest without ongoing involvement, especially those who want to invest an amount above the deposit limit of a Kupat Gemel LeHashkaa (קופת גמל להשקעה).
- The main advantage
- A combination of professional management, Liquidity, and Tax deferral.
- The main disadvantage
- Management fees and the absence of a special tax benefit when withdrawing money as an annuity.
Frequently asked questions
Can the money be withdrawn at any time?
Yes. A Polisat Hisachon (פוליסת חיסכון) is a fully liquid product. You can withdraw the money in part or in full at any time, without exit penalties or defined withdrawal dates.
Is it an Insurance policy?
No. Despite the name, it is an investment product and has no insurance component, such as Life insurance or disability insurance. The policy is used to manage money in the capital market.
Do you pay tax when switching between tracks?
No. Switching between investment tracks within the same insurance company is not considered a Taxable event. You can change the risk level without paying capital gains tax at the time of the switch.
Is there an annual deposit limit?
No. Unlike a Kupat Gemel LeHashkaa (קופת גמל להשקעה), a Polisat Hisachon (פוליסת חיסכון) has no limit on the annual deposit amount, and you can deposit large sums as well.
How can you track the money?
Tracking is done through the personal area on the insurance company's website or app. There, you can view the updated balance, the returns achieved, and the investment tracks in which the money is invested.
How do you open a Polisat Hisachon (פוליסת חיסכון)?
You can open a Polisat Hisachon (פוליסת חיסכון) digitally through the insurance company's website or through an insurance agent or customer service representative.
Compare and choose wisely
Before choosing a Polisat Hisachon (פוליסת חיסכון), it is worth reviewing the table we created for you, based on Capital Market Authority data, and comparing which policies delivered the highest returns alongside the lowest management fees.
Comparing the offers
Before choosing a Polisat Hisachon (פוליסת חיסכון), it is worth comparing offers from different providers. In the table we created for you, we compiled the management fees, investment tracks, enrollment terms, and additional services offered by each provider to help you choose the offer best suited to your needs.
In summary
A Polisat Hisachon (פוליסת חיסכון) is an investment vehicle that provides simple, managed, and liquid access to the capital market.
It is particularly suitable for those seeking professional management and the benefits of Tax deferral, without being limited by an annual contribution cap.
However, it is important to compare it with alternatives such as a Kupat Gemel LeHashkaa (קופת גמל להשקעה), mainly due to management fees and the lack of a special tax benefit when withdrawing funds as an annuity at retirement age.