Life insurance may be the preferred investment of the French, its subtleties are still often mysterious for many underwriters. Probably because it benefits from several favorable tax regimes which overlap:
- Firstly, life insurance is a savings product whose gains recognized during a withdrawal or redemption are taxed the less the duration of the contract is long (for gains from premiums paid before 27/09/2017). A criterion to know well to optimize its management.
- Then, life insurance benefits from a specific civil regime in terms of transmission: the sums paid to the beneficiaries of the contract upon the death of the insured are outside the estate. And these amounts are transmitted without tax to the beneficiary, up to € 152,500 per person, when they come from premiums paid by the subscriber before age 70. The 2018 finance law did not change the taxation of life insurance in the event of death.
Therefore, life insurance is the ideal investment to meet three objectives:
- Receive low-tax additional income immediately and / or upon retirement
- Optimizing the transmission of heritage
I. Capitalizing on capital
Recent, “open architecture” contracts are said to be multi-media and multi-manager.
Multi-media life insurance
Life insurance is one of the most efficient management envelopes giving access to four asset classes:
- euro funds, with guaranteed capital.
The euro fund in your contract is useful as a fall-back solution and for the security it provides in the event of regular withdrawals. It therefore has to be among the best on the market.
- diversified UCITS (funds and sicavs) that allow you to invest in all of the financial markets.
UCITS are managed by professionals and investment is made without entry and exit fees.
- SCPIs to benefit from a broad and diversified real estate offer.
SCPIs make it possible to invest in residential, office and commercial real estate, with flexibility, without any concern for management. The investment is liquid thanks to the organization of a secondary market for shares.
- structured products, an alternative to the Euro fund, making it possible to diversify and offer profit opportunities greater than those expected on the Euro fund, with controlled risk.
A structured product is a financial instrument which allows the investor to benefit from downward protection and upward gain potential on the markets (potential limited by the cost of hedging).
⇒ Distribution to be tailor-made according to your level of acceptance of the risks and your objectives
► From 100% dynamic to 100% safe.
You are looking for :
- Security of capital at all times = security profile
- Limited capital growth in return for low risk-taking = prudent profile
- Moderate capital growth with moderate risk taking = balanced profile
- High capital growth on average, with a risk of significant loss = dynamic profile
- Very high capital growth on average in return for a very significant risk of loss = aggressive profile
⇒Arbitrations possible at any time depending on the economic situation and your objectives without immediate taxation.
► Flexible tailor-made management
After determining your investor profile (from safe to aggressive), Juris Vie offers you an asset allocation in accordance with your objectives and wishes.
Why a multi-manager contract?
No institution has the monopoly on the best management in any sector, hence the importance of being able to choose different managers.
Some managers have particular expertise in geographic areas, others in economic sectors … Compared to an index, the disparities can be extremely large between the best and the worst funds. The objective is to select the best managers through the various supports offered.
On certain contracts, it is now possible to choose a management managed by Olifan Group.
For information: Any product invested on the financial markets can present significant volatility and can cause significant price variations both upwards and downwards without any guarantee of maintenance of the invested capital.
II. Receive low-tax additional income
Taxation is done on a buyout (withdrawal of money from the contract).
Warning ! Since January 1, 2018, the finance law for 2018 has changed the taxation of life insurance in the event of life, and has been applicable since that date.
The single flat-rate levy (PFU) of 30%, more commonly known as “flat tax” was created.
As a reminder, only the capital gain realized on the life insurance contract is subject to tax. In the event of a partial redemption, the “portion from the premium paid” and the “portion from the earnings” must be determined from the amount redeemed.
How to determine the applicable tax in the event of partial or total surrender on your life insurance (or capitalization) contract?
There are 3 cases:
A. Premiums paid before September 26, 1997
For premiums paid on your life insurance or capitalization contract before September 26, 1997, the gains are completely exempt from tax, in the event of redemption after 8 years.
For life insurance or capitalization contracts opened before September 26, 1997, and for premiums paid between September 26, 1997 and December 31, 1997 up to a limit of 30,490 euros per member, gains are exempt from tax in the event of redemption after 8 years.
B. Premiums paid between September 26, 1997 and September 27, 2017
In the event of redemption on your life insurance or capitalization contract on which the premiums were paid between September 26, 1997 and September 27, 2017, the applicable taxation does not fall within the scope of the new 2018 finance law.
Consequently, the taxation is degressive according to the duration of the contract
You have the choice to be taxed:
- either income tax (at your marginal tax rate)
- either at the rate of the Fixed Liberation Levy (PFL) according to the following scale:
|Before 4 years||35%|
|Between 4 and 8 years old||15%|
|After 8 years||7.5%|
After 8 years, there is an allowance on the interest share of the buy-back in the amount of:
- € 4,600 for a single person
- € 9,200 for a married or PACS couple
Social security contributions are due at the time of partial or total redemption, on life insurance or capitalization contracts invested in units of account. Since January 1, 2018, social security contributions have dropped from 15.5% to 17.2%.
Contracts invested only in the euro fund, social security contributions are taken over the life of the contract since 2011.
C. Premiums paid as of September 27, 2017
The Single Fixed Levy at 12.8% + social security contributions of 17.2% apply to redemptions from January 1, 2018 on the capitalization and life insurance contract products from payments from September 27, 2017, EXCEPT :
Income relating to premiums paid from September 27, 2017 when the amount of net premiums (capital shares redeemed) paid on December 31 of the year preceding the redemption on all contracts (capitalization and life insurance, before and after September 27, 2017) does not exceed € 150,000 per beneficiary of the contract surrender of which he is the holder.
In other cases, it is the non-discharging flat-rate levy which applies by default, on the share of the products attached to the premiums paid from September 27, 2017, at the rate of:
- 12.8% if the contract is less than 8 years old
- 7.5% if the contract is 8 years old or more
To this withdrawal rate is added the withholding of social security contributions at the rate of 17.2% (on products which were not subject to withholding at the time of their registration in an account: euro fund products registered before 07/01/2011 and capital gains on UC).
You have the option of opting for taxation on the progressive scale of income tax. The option will then be global.
After 8 years, the reduction on the interest share of the buy-back is kept for the same amounts:
- € 4,600 for a single person
- € 9,200 for a married or PACS couple
In addition, beyond 8 years, the new 2018 finance law introduced the concept of a threshold of € 150,000, below which products benefit from the 7.5% tax rate. This threshold is assessed on all of the member's life insurance and capitalization contracts.
Beyond this threshold, a fraction of the winnings will be subject to the rate of 12.8%.
Summary table of the taxation of life insurance in the event of life:
Having cash without tax: use of advances
In the event of a temporary need for cash, it is possible to make advances. These advances are not subject to taxation. The amount of the advances produces interest, which will have to be repaid at the same time as the capital advanced.
Go out as an annuity
Life insurance allows you to get out in the form of an annuity, with the advantageous taxation they offer.
III. Optimizing the transmission of heritage
Life insurance offers very advantageous taxation for the transmission of wealth.
The taxation for new contracts depends on the age of the insured at the time of payment of the premium.
|Before 70 years||After 70 years|
The surviving spouse or partner bound by a PACS are fully exempt.
The new 2018 finance law did not change the taxation of life insurance in the event of death.
Life insurance summary
- Diversity of investment vehicles, from secure assets (funds in euros) to more or less risky investments, with no entry or exit fees on UCITS.
- Advantageous taxation in the event of redemption, when it is well controlled
- Request advances without reducing your capital and without incurring any taxation.
- Possibility of exit in life annuity with an advantageous taxation.
- Ideal for the transmission of heritage.
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article published on March 26, 2018