Insurance Savings Policies Offer Flexible Investment Option for Inheritance Funds

Managed savings policies, primarily offered by insurance companies, provide a flexible investment vehicle suitable for both short- and long-term savers who have available funds, such as an inheritance, and prefer professional management. These policies allow investors to place money in capital markets without strict restrictions, but they typically carry relatively high management fees of about 1% annually on the accumulated amount.

This savings tool is ideal for medium-term investment horizons and does not offer significant tax benefits. Management fees range between 0.7% and 1.2%, and there are no limits on deposit amounts in Israeli shekels. Deposits can be made as a lump sum, monthly standing orders, or a combination. The funds remain liquid and can be withdrawn within a few business days.

Tax implications arise upon withdrawal, with a 25% capital gains tax on profits. Switching investment tracks within the same insurance company is not a taxable event, allowing continued compound growth, but transferring funds to a different institution triggers taxation. Leading performers since early 2026 include Clal Insurance with a 7.4% return, while over the past three years, Ayalon Insurance and investment houses Meitav and Meor have delivered returns close to 45-50%.

Direct competitors to these savings policies are investment provident funds, which generally have lower fees and better tax advantages but impose annual deposit limits. Other alternatives include managed investment portfolios, which require high minimum investments and incur transaction fees, and independent mutual fund investments.

Financial advisors recommend negotiating management fees, especially for larger deposits, utilizing tax provisions for those born before 1948 to save up to approximately 4,600 shekels annually, and aligning investment risk levels with the investment horizon, equity-focused for long-term and conservative for short-term needs.