Life insurance, a profitable savings product
Life insurance is a very advantageous long-term savings product. This type of financial investment allows the saver to benefit from increased flexibility, to access tax breaks and to optimize his estate. We will see, first of all, that’is it’The client can choose to take out a life insurance policy before detailing all the benefits of this type of financial investment.
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Life insurance: definition
Life insurance is a long-term financial investment vehicle. The life insurance contract is spread over a minimum period of 3 or 5 years depending on the insurer. This type of savings contract allows the insured to pass on money to his beneficiaries (designated at the time of signing the contract) at his death, to receive an annuity or capital in case of survival at the end of the contract and to make his money grow.
Apart from the link with the death of the insured, investing in a life insurance policy is an efficient solution to prepare for an easy retirement, to finance a future project and/or to optimize one’s succession.
The advantages of investing in a life insurance contract
Life insurance is a very profitable savings product in terms of taxation and flexibility.
A flexible financial investment
It is important to note, first of all, that a person has the right to take out several life insurance policies with different insurers. This is an efficient solution to multiply the interests. Then, the first payment to be made when subscribing to the life insurance contract generally amounts to a few hundred euros.
The subscriber can then add to the account according to his possibilities and personal dispositions. The amount of payments is not limited. The payment frequency is not taxed.
Moreover, the funds are available at any time throughout the duration of the contract. The insured has the possibility of withdrawing part or all of the capital before the end of the contract, in case of emergency or particular need, without specific conditions. If the policyholder makes a withdrawal during the first 8 years of the contract, taxes apply only to the gains.
A reduced taxation
The life insurance allows the insured and his beneficiaries to access important tax advantages.
Life insurance allows successors to enjoy considerable tax breaks. In case of death of the insured, his beneficiaries enjoy a tax exemption on the capital from the life insurance contract. First of all, the inheritance from a life insurance policy is not included in the’The policyholder’s assets are not subject to inheritance tax and are therefore not subject to inheritance tax. In addition, the gains are not taxed.
In some cases, the capital is taxable. However, tax reductions are provided for. The capital resulting from payments made before the insured’s 70th birthday is completely tax-exempt, up to a limit of 152 500 € per successor.
An allowance of 30 500 € is provided for the capital resulting from payments made after the insured’s 70th birthday.
Finally, in case of survival at the end of the contract, the insured has the choice between two withdrawal methods. He can opt for a capital withdrawal and choose between a total redemption and partial withdrawals. For a single capital withdrawal, the taxation applies only to the interests accumulated during the whole duration of the contract.
An allowance (€4,600 for one person and €9,200 for a couple) is provided for if the partial or total withdrawal takes place 8 years after the contract was concluded.
A life annuity provides the insured with a regular income that is paid at a set frequency (monthly, quarterly, semi-annually or annually). The amount of the payments is defined according to the amount of the capital, the age of the annuitant and his life expectancy (fixed by the INSEE). Only a part of the annuity is affected to the annual social deductions (17.2%) and is taxable, at a rate fixed at the date of payment of the first annuity, depending on the age of the insured.
The tax amounts to :
- 70% if under 50 years old,
- 50% if the insured is between 50 and 59 years old,
- 40% if aged between 60 and 69 years old,
- 30% if the annuitant is 70 years old or more.
Using a life annuity transfers ownership of the savings to the insurer. The decision to exit into a life annuity is irreversible.