Over the past three decades, a series of amendments has taken small steps to erode the tax benefits of life insurance. The arrival on the market of new investment instruments has also placed life insurance under stiff competition. This savings product nevertheless continues to appeal to the French, thanks to its functions of transmission of wealth and intergenerational transmission.
Less tax advantages
The multiple changes have brought the tax on life insurance capital gains to a level equivalent to that of a securities account in the event of withdrawal before eight years. These revisions ended up distorting this heritage instrument by calling into question its raison d'être.
In fact, household life insurance savings are traditionally reinvested in funds with guaranteed capital. They are mainly used to finance the sovereign debts of States. However, in recent years, bond loan rates have been below zero. That is, states borrow at negative rates.
Being the most used instrument by the French before to prepare for their retirement, life insurance also finds itself facing competition from the retirement savings plan (PER) implemented in October 2019.
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Important Despite the successive planes on the taxation of life insurance, this financial investment continues to offer interesting advantages.
To note : The subscriber of a life insurance or other insurance product such asphone insurance is free to terminate his contract at any time, without having to justify a reason or pay a penalty.
For the saver, life insurance is an interesting way to build up a financial reserve. This instrument can serve as a cash deposit or represent an additional source of income after retirement. In addition, it offers the advantage oftaxation decorrelated from the tax scale.
This investment also makes it possible to transmit heritage. It is an excellent tool for intergenerational transmission. It is indeed possible to bequeath funds to his descendants.
For example, a grandparent can open an account in the name of his grandchildren and thus allocate funds to them.
The process of “manual donation with attached pact” allows to define the use of the envelope, including the age of the provision of funds, the type of contract, etc. The operation is exempt from gift tax for transmissions of less than 31,865 euros per beneficiary descendant.
For unmarried couples, life insurance is also a great way to bequeath funds to a partner in the event of death. It is even possible to designate another person as beneficiary of the contract.
This product allows in particular to transmit up to 152,500 euros without inheritance tax. It ensures the lifestyle of the surviving cohabiting partner knowing that the latter is not entitled to benefit from a reversion of retirement pensions.