Why take out a life insurance policy?
A life insurance policy can meet different objectives, which explains why it is the preferred investment of savers.
Make your savings grow
Life insurance contracts offer a range of vehicles to invest your savings according to your risk profile. Those who refuse any capital loss will be able to move to the dollar fund, while those who favor yield will add units of account.
Two types of contracts coexist: single life insurance, also known as dollar life insurance and multi-asset life insurance with unit-linked funds.
- Monosupport life insurance makes it possible to invest your savings without risk. The contract works like a savings account. The capital is guaranteed and produces interest.
- Multisupport life insurance includes, in addition to a risk-free dollar fund, funds to invest in various asset classes (stocks, bonds, real estate, etc.) more or less risky.
It is all the more interesting to place your savings on a life insurance contract that can be withdrawn at any time if necessary, with a limited tax impact even before 8 years. If you do not wish to draw in your life insurance policy (for tax reasons, for example), you can benefit from an advance. The insurer of the contract grants you a loan at a rate slightly higher than that of the fund in dollars, which avoids any withdrawal.
Prepare for retirement
The availability at any time of the funds invested in a life insurance contract may lead to prefer this support to prepare for retirement. The PERP or PERCO type of dedicated products require the funds invested to be locked in until retirement.
Upon retirement, the insured may also choose to receive a retirement supplement in the form of a life annuity. In this case, the earnings will be exempt from income tax (they will bear the only social security contributions). The pension paid will be taxable on a fraction of its amount depending on the age of the beneficiary.
Pass on a heritage
Life insurance makes it possible to grow capital and / or prepare for retirement. It is also a formidable transmission tool, since it escapes the applicable civil and tax rules in matters of succession. Life insurance does not fall within the estate of the insured, who can thus pass on wealth to a distant relative or a third party by evading inheritance tax.
While life insurance has long benefited from a lighter taxation compared to the securities account, even the PEA, the introduction of Flat Tax has significantly reduced this advantage.
However, life insurance has the advantage of being able to arbitrate (sell funds to buy others) by being exempted from tax and social security. These withdrawals will be paid only in case of withdrawal or closure of the contract. In the case of a securities account, however, each capital gain is accompanied by the payment of the corresponding taxes.
If all life insurance contracts make it possible to grow your savings, prepare for retirement, or pass on wealth, why favor one over the other? What are the criteria for choosing a life insurance policy?
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