Life insurance is a tax envelope
Life insurance can be seen as an envelope: the money you put in it can be invested in many ways. There are also two types of life insurance:
The monosupport contract : the entire capital is positioned in a secure fund: the euro life insurance fund (or euro fund). This secure investment generates interest each year, and the risk of loss is zero: the value of your contract is guaranteed by the insurer.
The multi-support contract : part of your money is placed in the € fund, and another is invested in riskier products but with higher remuneration potential: life insurance units of account . There is a wide variety of media available, allowing you to access the financial and / or real estate markets.
The choice of one or the other, as well as the vehicles on which your savings will be positioned, will depend on many factors, such as your risk profile, your objectives in terms of profitability, your age, your degree of knowledge of markets …
Life insurance is a flexible savings contract
Contrary to what we often think, savings are not blocked in life insurance. The capital (and the capitalized interest) remains available at all times. If, for example, you need cash for a specific project, you can proceed with a buyback request:
Partial : you only get back part of the value of your contract,
Total : you get back all of it but you lose the tax priority of your contract.
Life insurance also allows you progressive capitalization: you pay one-off or regular premiums at your convenience. If you need money but do not want to touch the capital invested in the contract, you can request an advance from the insurer.
Several methods of settling the contract are also possible. It could be for example:
From a capital exit,
An exit into a life annuity (your capital is then transformed into an annuity, according to its surrender value),
An exit in the event of death, that is to say the transmission of the capital (or an annuity) to the beneficiary (ies) that you have designated.
The subscription is also possible for two: this is called co-membership life insurance . The main advantage of a joint subscription is that you can determine who will receive the capital in the event of death (settlement on the 1st or 2nd death).
Finally, if you want to improve the profitability of your contract by investing in units of account , but you are not an expert in the field, you will have the choice between several modes (and options) for managing your life insurance (your assets ). A manager will then make the investment choices for you.
Life insurance allows capital to be transferred outside of inheritance
When you take out life insurance, you are asked to designate one or more beneficiary (ies), natural person (s) or legal entity (ies). You can name (almost) whoever you want: spouse, friend, nephew, association, minor child, person with a disability….
Upon death, the capital will be transferred to the chosen person under very favorable tax conditions: in fact, life insurance is excluding inheritance , for the portion of premiums paid before age 70. Each beneficiary will enjoy an individual allowance on the sums received, and beyond that, the tax rate will remain very favorable.
The allowance is € 152,500 per designated beneficiary (capital and interest included), all contracts combined. Beyond that, there will be 2 levels of taxation depending on the size of the amount transmitted.
This allows you, for example, to favor a friend, who will benefit from an allowance and a reasonable taxation beyond this allowance, when he would normally have been taxed, on the basis of the inheritance tax scale, at 60%. !
The reduction on the transmission of capital for the portion of premiums paid after 70 years
On the death of the insured, the portion of the premiums paid after the age of 70 will return to the estate after deduction. Life insurance will then not be treated separately, unlike the fraction of payments made before age 70.
Even if this may appear to be a drawback in terms of estate optimization, a global allowance (shared between all the designated beneficiaries) of € 30,500 is still planned.
Contracts with a value lower than this sum and for which the premiums have been paid beyond 70 years will therefore be totally exempt when the capital is transferred to the beneficiary (ies). For contracts over € 30,500, the portion exceeding the allowance will be taxed as inheritance tax, according to the scale in force (and which depends on the degree of kinship between the heir / beneficiary and the deceased).