Life insurance is an exciting contract for anyone wishing to save, whether the final goal is to benefit from a supplementary pension or to pass on an inheritance. It is not for nothing that this placement remains the privileged one of the French. But despite everything, it is a contract on which many French people ask themselves many questions. Decryption.
LIFE INSURANCE: IN SUMMARY
Contrary to popular belief, life insurance is not an investment that is only received in the event of the death of the subscriber. It is even instead of the opposite at the base. Indeed, also called “life insurance,” this contract allows the insured to receive the amount he has saved in the event of life at the end of the contract. It is. Therefore, more of a savings contract, an ordinary investment, than death insurance strictly speaking.
However, in the event of the subscriber’s death before the end of the contract, the money will be paid to the beneficiaries designated by the latter: this is one of the two main advantages of life insurance, along with taxation.
A standard investment, such as a passbook or savings plan, will not allow you to choose who your money will be paid if you die. The sums will fall into your inheritance and be distributed among all your heirs. Even if you don’t like them
The other advantage is, therefore, the particularly interesting taxation. By placing your savings in life insurance, you are partly exempt from taxes on your life insurance policy from the 8th year. For this reason, financial or wealth management advisers will always recommend an investment horizon of at least eight years for this type of investment.
LIFE INSURANCE: UNDERWRITING
When taking out all life insurance, you will have two main things to realize:
- The payment of your first contribution
- The designation of your beneficiary(ies).
Payments of contributions are variable: you can choose to deposit a single settlement in the form of a capital or favor periodic premiums monthly, quarterly, or annual basis.
As for the choice of your beneficiary, you can keep the default clause or indicate precisely the name and surname of the person to whom you wish to bequeath your savings. But be careful: don’t forget to change it if you change your mind a few years later.
Depending on the contract you have taken out, the guarantees are expressed in euros in “funds in euros” agreements or shares and other units in “unit-linked” contracts. The choice between these two contracts is made according to the remuneration and the return you want, and the risks you want to take. A euro fund contract, also called mono-support, is less risky than a unit-linked contract, but the latter pays more.
Do not hesitate to ask for an explanation on life insurance for more details.
LIFE INSURANCE: RECOVERY OF SUMS INVESTED
When you receive the amount saved from your insurance, you can generally choose between two options:
- single payment in the form of capital
- revenue in the form of annuities, life or temporary.
You will then be able to receive a monthly sum for a certain number of years (temporary annuity) or until the end of your days (life annuity). It can be a survivor annuity for more security: if you die, part of the annuity will continue to be paid to a “second head,” which you will have determined at subscription.
The life annuity is taxable at 70% for those under 50, but this amount decreases over the years since the tax is 30% for people over 70.
Moreover, life insurance is a very flexible contract. So you can ask for your capital again, if necessary, before the end of the contract: this is called the redemption of life insurance.
Life insurance, therefore, has everything to please anyone wishing to anticipate the risks of the future under good financial conditions or to protect their loved ones. To choose well, compare, get advice, and look carefully at historical rates of return, management fees, and payment fees when comparing different contracts.