An investment appreciated by the French, life insurance is a transmission tool that benefits from many advantages. Appreciated for its advantageous tax regime in the event of death, it also offers significant freedom and flexibility.
Life insurance is an investment that allows you to build up savings over the long term. On the death of the holder, the capital is transferred to the persons previously designated in a beneficiary clause. This mechanism makes it possible to anticipate his succession while benefiting from favorable taxation (1), which gives him a place of choice in a transmission strategy.
Freely designate your beneficiaries
You are free to designate the beneficiaries of your choice even if they do not come to the rank of your legal heirs (partner, friend, etc.), except doctors, caregivers, and ministers of worship accompanying the last illness. This can be to benefit a child or your grandchildren, give your spouse more cash, escape the heavy taxation applicable to cohabitants, brothers, and sisters, nephews, or nieces…
You can designate all your beneficiaries in a single clause or plan to give over two generations. The clause can be modified at any time (2). It is still recommended to surround yourself with a heritage advisor or a lawyer to write it well.
The capital held on these contracts does not enter into the estate of the deceased. They are not taken into account for the calculation of the available portion and the hereditary reserve. However, you cannot use life insurance to circumvent it and disinherit your children or your spouse.
Reduce inheritance tax
Life insurance benefits from a favorable tax framework in the event of death. It allows you to pass it on to your loved ones without them being taxed or by significantly reducing taxation (1). No other investment framework benefits from these advantageous conditions.
When the funds are invested before you turn 70, you can pass on to each beneficiary up to €152,500 tax-free. Beyond that, a flat rate of 20% applies up to €700,000, then it increases to 31.25%. (1)
In the context of parent-child transmission, this advantage will be of interest to all persons whose assets exceed the value of the estate allowance of €100,000 per child and per parent, ie €200,000 for a couple with one child and €400,000 with two children. By placing your savings on life insurance, rather than on traditional savings books (which enter into the estate), you benefit from an additional allowance of €152,500. (3) (1)
Life insurance proves to be essential for people without children, unmarried or not PACS so that the people who you designate are not crushed by the weight of taxation. Indeed, within the framework of the succession, the brothers and sisters are taxed at 35% and 45%, 55% for your nephews and nieces, and the cohabitants are taxed at 60% like third parties, after small deductions. With life insurance, they will be taxed at 20% after the reduction of €152,500 per beneficiary, all contracts combined.
*Let’s take the example of a transfer of €150,000 to your partner. With life insurance, he will receive the full amount without being taxed since the capital is less than the amount of the allowance of €152,500. If this sum had been placed in a savings account, he would have had to pay €89,044 in inheritance tax (1) (calculation made with the service-public simulator). A will would also have been necessary for him to inherit.
When the funds are invested after the holder of the life insurance contract is 70 years old, taxation is less advantageous since the premiums paid are subject to inheritance tax after an overall allowance of €30,500 applicable, all contracts and beneficiaries combined. (1) On the other hand, interest is not taxed, which can represent a significant advantage if your contract has enjoyed a good return. Again, compared to other investment frameworks such as passbooks, where all monies received would have been taxed, the advantage can therefore be significant.
Keep control of your savings for as long as you live
Contrary to the donation which requires you to dispose of the property or the sum during your lifetime, life insurance allows you to organize the transmission of your assets without depriving you. You retain free access to your savings, in case of need, throughout your life. (2) Designated persons will receive unused savings.
