Why are the French increasingly attracted to taking up life insurance? Let there be no doubt about the merits and benefits of such an action. This new way of investing and saving offers a significant gain for everyone. The point.
Life insurance is a contract between a subscriber and an insurer whereby the latter undertakes to pay an annuity or capital to the insured in exchange for the payment of sums of money. The insured (or the beneficiary) will be able to collect the counterpart of the premiums he has paid from the time limit imposed in the insurance contract, generally set at least 8 years. However, exceptions to this rule are always possible with the agreement of the insurer (death of the subscriber, force majeure, etc.).
According to a wealth management advisor, the capital retroceded at the end of the contract is defined by the totality of the payments plus the interest rate defined in the contract. Moreover, premiums may be paid in a single instalment at the beginning of the contract or periodically as agreed by the parties.
According to the figures posted by the French Insurance Federation for the 2017 financial year, the value obtained in life and estate insurance amounted to nearly 2 billion euros for the first half of the year. Even if it is a little less than in 2016, it must be noted that the French are firmly attached to this investment which they consider quite profitable despite some recent reform projects. Indeed, the Macron tax reform (the 30% flat tax) or the Sapin 2 law could not prevent our compatriots from engaging in this highly profitable practice!
What particularly appeals to the French to subscribe to this type of life contract is the tax exemption obtained with it. During a transaction carried out on a life insurance contract (sale of secure euro funds, SCPI or equity funds…), you are exempt from tax and social security deductions. These are only paid on final withdrawal or in the event of death, unlike ordinary securities accounts for which you pay deductions on each capital gain made.
The tax exemption during a life insurance contract is not negligible, the subscriber can apply for a tax-free advance. Thus, the insured will be able to receive a capital in cash without any impact on his savings plan, which will always grow without being affected by any tax.
On the other hand, death benefits are exempt from inheritance tax, up to €152,500 for each beneficiary in the event of the subscriber’s death. The tax imposed is 20% compared to 60% duty in the case of a classic inheritance.