How does a life insurance contract work?
A life insurance policy is a framework for your savings. It allows you to build up or grow capital by investing your money in different media.
There are two types of support: funds in euros and units of account.
There are mono-support contracts (100% of your savings are placed in funds in euros or 100% in units of account) or multi-support contracts, which allow you to divide your savings between funds into euros and teams of budget.
If you opt for a multi-media contract, you can change the distribution of your investment at any time according to the different media. This is called “making an arbitrage.” In return for this arbitration, the insurer will charge you arbitration fees.
Life insurance: characteristics of the life insurance contract
A life insurance contract is an agreement by which an insurer undertakes with the subscriber, subject to the payment of premium(s), to pay capital or an annuity in the event of the life or the occasion of the death of a designated person ( the insured) for the benefit of the member or a third party (the beneficiary).
This is a financial investment for your savings with a particular operation. A life insurance policy can be opened at any age.
A distinction must be made between life insurance and death insurance, which provides for the payment of capital only in the event of death.
What are the supports of a life insurance contract?
By opening a life insurance contract, you place your money on two types of support: – Funds in euros or guaranteed funds: the sums placed on this support cannot decrease. It is the insurer’s guarantee and the absolute security for your savings. – Units of account: these are equity and bond funds that allow you to access the stock markets. They involve a share of risk and a hope of more significant gain.
You can choose to invest all of your capital in just one of these supports. We then speak of a mono-support contract.
You can also divide your capital between these two supports. We then speak of a multi-media contract. In this case, you can modify the distribution between these two supports, subject to arbitration costs that the insurer will deduct.
Life insurance: the tax framework
Capital gains from a life insurance policy are exempt up to €4,600 per year and even €9,200 for a couple (and subject to a reduced levy of 7.5% beyond that), as soon as you keep your investment eight years minimum. Exemption from inheritance tax: – For payments made before your 70th birthday: Savings are transferred exempt from transfer tax upon death up to €152,500 per beneficiary. Beyond that, transmission by life insurance benefits from a transfer tax rate of only 20% regardless of the relationship between the insured and the beneficiary. – For payments made after your 70th birthday: only the part of the payment exceeding €30,500 is subject to transfer duties. Interest is transmitted entirely tax-free.
Life insurance: the beneficiary clause
In this clause, the policyholder designates the person who will receive the benefit provided by the insurer (in the form of capital or an annuity) upon settlement of the life insurance contract.
Life insurance: subscribe to a life insurance policy.
Several reasons may encourage you to open a life insurance contract: – To build up assets to finance a future project (studies of children, purchase of a house, etc.) – To make your investments grow. – To benefit from an advantageous tax framework. – To bequeath an inheritance under attractive tax conditions to the person(s) of your choice.
To have your money at any time: the sums placed on a life insurance contract are not blocked. On the other hand, you have to wait at least eight years to benefit from the exemption on capital gains.
