Have you just taken out life insurance, or are you considering taking the plunge, but you don’t know how the contract can support you through the events of your life? To help you project yourself 5, 10 or 20 years from now, we tell you everything about the contract’s different ages.
Take out a Life Insurance Policy, a Constructive Initiative.
Not sure if it’s the right time for you to take out a life insurance policy? Even if you are young and have limited savings, know that the main thing is to take a date. And don’t worry: membership is an important moment, but it’s not complicated.
How Life Insurance Works: Membership?
Membership can be done remotely or with the help of your advisor. Completing the membership application is only a formality, but it should not be neglected. If you have any doubts about how to complete it (contract options, choice of media, choice of beneficiaries in the event of death, etc.), it is always good to seek advice.
Your First Payment Is Made By Check-in Your Name.
There is always a minimum amount to be paid, which varies according to the contract and the subsequent payment methods chosen (free or periodic). It falls within a very wide range, from 10 to 2,000 $. On average, the initial payment is 250 $.
Exercise Your Right of Withdrawal
Of course, you have the right to change your mind. Any member has the right to renounce his membership by registered letter with acknowledgment of receipt. For example, at Carac, the waiver period is 30 calendar days. Of course, if you give up, the full amount will be returned to you.
How To Choose Your Life Insurance and Investment Vehicles?
You have the choice between different investment vehicles: unit-linked contract (the funds are invested on the stock or real estate markets), single-support contract in $ (the funds are guaranteed) or multi-support contract (mix of investments in $ and units of account).
If your projects are for the medium term (first real estate purchase, children’s studies, professional project, etc.), you will preferably opt for a single-support contract in $. This financial investment offers a measured but fully guaranteed return.
For your long-term projects preparing for your retirement, passing on an estate, etc.), a multi-support contract is a wise choice. Savings can be placed in equity funds providing access to performance opportunities on the financial markets and secure support in $. You determine your investment allocation according to your objectives, knowledge of the financial markets, and your investment horizon.
What To Remember –
Single or multi-carrier life insurance policy? Choose according to the horizon of your projects!
- for your medium-term projects: mono support denominated in $
- for your longer-term projects: multi-media in $ and units of account
Alice, 40, executive secretary, wants to ensure additional income when she retires or even to pass on capital to her children at favorable tax conditions. She takes out unit-linked life insurance, pays 150 $ upon joining and sets up automatic monthly payments.
Go Further Consult our advice guide “How to choose the right life insurance?”
Discover Our life insurance offers:
- Multi-vehicle life insurance.
- Life insurance is $.
- Solidarity life insurance.
- Life insurance to support people with disabilities in their projects.
- Life insurance to give your children or grandchildren a boost.
- Life insurance: the right calculation for your savings.
With life insurance, you save at your own pace: small monthly payments or larger sums paid on time, anything is possible. In all cases, your savings are valued according to the type of contract taken out and the investment vehicles chosen.
What Types of Payments on Your Life Insurance?
You can choose to make one-time payments or save periodically. (every month, quarter, semester, year) by direct debit. You can also do both! Note: your contract always stipulates the minimum payment amounts to be respected.
The fees on free installments can be decreasing according to their amount.
For some contracts, the higher the payout, the lower the payout fees. And, sometimes even, these fees are capped.
The Principle of multi-vehicle Life Insurance:
Your projects’ right to change course are likely to evolve and life events, your ambitions to grow, or be revised downwards. Your life insurance contract can adapt to these changes.
As part of a multi-support contract, you have the choice between different management modes. Free management or direct, with which you manage your contract and only while monitoring the funds. You are vigilant, and you can react quickly to ensure that the evolution of the investment supports matches your objectives.
Streamlined management, the most serene. You choose a distribution of your turnkey support according to your investor profile.
Horizon management, ideal for retirement or a fixed term. Your savings invested in risky media are gradually secured by annual automatic arbitrage, free of charge.
At any Time, You Can Change Management Model and Profile.
Have you become a wise investor and want to manage your investments yourself? Go from streamlined management to open management.
Are you 25 years old and have a one-year life insurance contract worth 10,000 $, thanks to a donation from your grandparents? Time is your ally: you leave the prudent profile for the dynamic profile to boost the contract’s performance. Your goal: in 8 years, make your first real estate purchase thanks to a significant contribution.
Arbitrations To Change Funds
On a multi-device contract, you can move part of your savings from one fund to another, which amounts to changing its distribution. There are automatic arbitrage options, which make it possible, for example, to secure the gains generated by the units of account or, on the contrary, to boost the interest generated by the support in $.
Schedule regular payments to save without thinking about it and mitigate any downturn in the financial markets.
Alice paid 50 $ per month on her life insurance policy for four years, then 100 $ per month for the next four years, taking advantage of a salary increase. In the 6th year, following her father’s death, Alice received 160,000 S as an inheritance, which she paid into her life insurance. After 8 years, with a capital of 395,821 $, with interest and capital gains, an average return of 3%, she was able to see that life insurance was the right calculation for her savings.
Partial Life Insurance Surrenders For Liquidity Needs.
With life insurance, your capital remains available throughout the life of the contract. To finance work, a wedding or face a hard blow, you have your savings in the form of partial redemptions.
Taxation of life insurance: The advantages of partial surrender after 8 years
The choice between two capital gains tax options flat-rate withholding tax: Deducted at source, its rate does not depend on the taxpayer’s overall income. It is said to be “discharging” because it does not include income tax, although the taxpayer must declare it.
Or Income Tax: Interest and capital gains are included in your taxable income.
Note that Social security contributions apply in both cases, without degressive.
The lump-sum discharge rate that differs according to the contract’s age is less than 4 years: lump sum discharge of 35% from 4 to 8 years old: lump sum discharge of 15% over 8 years: standard discharge of 7.5%.
In some cases of exemption under certain conditions affecting the subscriber or his spouse, capital gains are not taxed:
- judicial liquidation
- early retirement
This provision applies until the end of the year following that the event occurs (art. 125-OA of the General Tax Code).
What To Remember?
The ideal: The partial surrender of life insurance after 8 years with life insurance, beyond 8 years, capital gains and interest are exempt from tax, up to a limit of 4,600 $ per year for a single person and 9,200 $ for a couple subject to joint taxation.
Life Annuity or Capital Outflow, To Recover Funds
Depending on your situation and your desires, you can receive all of your savings (withdrawal in the capital) or opt for additional income at retirement (withdrawal in life annuity). Life insurance thus adapts to your needs and your lifestyle choices. But beware, the tax system is different …
The Life Annuity, For Additional Income For Life.
Your capital is converted into a life annuity, paid periodically until the end of your life. Its amount is calculated in particular according to the savings made on your contract, your age and your life expectancy. If the interest on the contract is exempt from income tax, the additional income is taxable for a fraction of its amount (from 50% to 70%), which depends on your age and type of final expense leads. This fraction is also subject to social security contributions.
The Capital Outflow, To Carry Out Your Projects
A capital outflow allows you to realize a project, such as buying a house or – why not! – a sailboat to go around the world. Taxation is interesting, especially after 8 years: the tax rate is then only 7.5%. Note that a full surrender results in the termination of your contract.
Note, however, that unless there is an urgent need, making a partial withdrawal of the maximum authorized amount is a wise idea. By leaving funds, you maintain your contract by taking advantage of its age. If you wish to reinvest in life insurance, you will not need to wait 8 years to withdraw your capital while taking advantage of the contract’s tax advantages.
Scheduled Partial Redemption
The choice to make scheduled partial withdrawals allows you to benefit from a flexible additional income while letting the rest of your savings continue to grow. You also keep the inheritance benefits associated with your life insurance.
Protect your spouse with the survivor’s pension option Reversion allows part of your pension to be paid to your surviving spouse upon your death. A reassuring option to supplement the survivor’s pension of the compulsory scheme.
At 62, Alice retired. To improve her income, she chose to transform her capital into a life income. Each year, it receives 2,000 $. Cumulated with her pension, she can now travel… Alice has taken out the survivor’s pension option. In the event of death, up to 100% of her pension can be paid to her husband.
Transmit your assets excluding inheritance or inheritance taxes
Life insurance is an excellent vehicle for transmitting wealth. In the event of death, it allows you to organize your succession under favorable tax conditions. The sums paid to the designated beneficiaries are exclusive of inheritance tax. A real legal and fiscal advantage.
Designation of Beneficiaries:
The essentials to know your life insurance contract allows you to designate the beneficiaries who will receive the capital, made up of the sums invested plus interest. This provision is not mandatory. However, suppose you have not designated any beneficiary. In that case, the capital of your contract will be integrated into your inheritance assets with two consequences: they will be subject to inheritance tax, and the distribution between your heirs will obey the rules of the common law.
Protector Favors The Person (S) of Your Choice.
You are free to designate the beneficiary (es) of your choice: spouse, children, grandchildren… or any other person outside the family circle (friends). Life insurance thus gives you the freedom to improve the situation of one or more heirs or to favor a third party.
Tax conditions for Transmission: The main principle amounts paid before the subscriber’s 70th birthday.
They are exempt from taxes up to 152,500 $ per beneficiary (capital and interest transferred). Beyond that, they are taxed at 20%, then at 25% above 902,838 $.
After the subscriber’s 70th birthday, only the sums paid (the capital and not the interest) are subject to inheritance tax, and the first 30,500 $ of capital is exempt.
The beneficiary clause of life insurance ensures that it is always up-to-date and precise and includes the words “failing” or “living or represented” if the beneficiary dies before you.
In the beneficiary clause of her contract, Alice named her children. On his death, they will receive the capital, taking advantage of life insurance’s advantageous tax framework.