An investment appreciated by the French, life insurance proves to be relevant when you wish to finance a medium and long term project, prepare your retirement and your inheritance. Life insurance has many advantages: reduced taxation, transfer of capital. Explanations.
What is the principle of life insurance?
Life insurance is a contract by which the insurer undertakes, in return for the payment of premiums, to pay an annuity or capital to the insured or his beneficiaries. Life insurance is a medium or long-term savings product.
After opening the contract with an initial payment, it is possible to make payments, regular or not, without limit of amount. Even if it is fiscally more attractive to life insurance save for at least eight years, you have the right to close your contract or make withdrawals at any time by recovering the sums invested increased by any gains and reduced by fees (administrative fees). , management, payments, arbitration).
The main types of contracts
Single support contracts
Your payments are invested in a fund in euros . Risk-free products, such as government bonds, and revalued each year. The capital invested is guaranteed at all times and the interest for the year is definitively acquired.
Multi-support contracts
Your payments are invested in risk-free products and also products linked to the stock market ( bonds , shares , funds, Sicav, etc.), invested in the financial markets, called units of account (UC) . The insurer guarantees not the value of these units, which varies, but their number. This investment is riskier than funds in euros but it can prove more profitable.
Before investing in units of account, it is imperative to define your investor profile and your acceptance of risks with your banker or your insurer with whom you take out the contract.
The advantages of life insurance
After a few years, you can withdraw your capital, that is to say close your contract and withdraw the money deposited, increased by the net gains. Attention ! You have no guarantee of getting back your entire investment if you invest in units of account (UC) .
It also offers the possibility of supplementing your income, particularly for retirement, through regular withdrawals or the transformation of your capital into a life annuity . The amount of the annuity is calculated by your insurer according to the amount of your capital and your age. The pension will be paid to you until the end of your life.
If you opt to receive a life annuity, you will no longer be able to recover the capital on your life insurance contract, nor transmit it to beneficiaries.
Finally, life insurance is an excellent tool for transmitting one’s assets thanks to advantageous taxation and great freedom in the choice of beneficiaries.
Life insurance: what taxation?
Interest from payments made since September 27, 2017 on your life insurance contract is subject to the single flat-rate withholding (PFU) .
The single flat-rate direct debit (PFU) occurs during the partial or total withdrawal of the sums available on your life insurance contract.
For a withdrawal from a life insurance contract taking place eight years after its opening , the flat-rate deduction amounts to 24.7% (including 7.5% for income tax and 17.2% for social security contributions) for sums paid less than €150,000. You also benefit from an annual reduction of 4,600 euros (9,200 euros for a married couple) on the earnings generated if your contract is more than eight years old.