How to buy back the capital of my life insurance?
As the subscriber of a life insurance contract, you can request a redemption of all or part of the savings made before the end of the contract. The surrender value is updated annually and must be indicated by the insurer.
There are two cases of capital withdrawal:
- Partial or total surrender before the end of the contract
- Advance, loan granted by the insurer to which a contractual interest rate is applied
Withdrawal of funds is final and the freedom of redemption is limited if the beneficiary has accepted the benefit of the contract. In this case, its written authorization is required for the redemption to be effective.
Most life insurance policies are redeemable, but you don't have to. The information must appear clearly on the contract at the time of subscription and the insurer is required to inform the subscriber each year of the value acquired by his contract beyond a capital of € 2,000.
LINXEA informs you
To recover the sums placed on your life insurance contract, you must contact the insurer of your contract or at least the distributor (bank, online broker, etc.). As a broker, LINXEA provides you with information on your rights but can in no way act on your behalf to recover the capital of a life insurance contract that it does not distribute.
What is the taxation in the event of a buy-back of life insurance?
During a buyback, only capital gains are subject to tax and social security contributions. The exit tax depends on the date of the payments (before or after September 27, 2017), the holding period with a threshold of 8 years to fully benefit from the tax-exempt potential of life insurance, as well as the amount of the sums paid into the contract (more or less than € 150,000):
- In the event of redemption before 8 years: taxation of capital gains up to 30% (12.8% flat-rate and 17.2% social security contributions)
- In the event of redemption after 8 years: tax at 24.7% for payments less than or equal to € 150,000 and 30% beyond with an annual allowance on capital gains of € 4,600 (€ 9,200 for a couple)
It is also possible to opt for the reinstatement of income from life insurance in the income tax base.
AT to note : Scheduled partial redemptions make it possible to optimize the annual allowance by staggering withdrawals.
There are situations of automatic exemption, in the event of:
- Dismissal or early retirement
- Disability of 2th or 3th category
The transmission tax in the event of the death of the insured depends for its part on the age of the subscriber during the payments (before or after 70 years).
In addition to income tax, life insurance is subject to social security contributions of 17.2%. Social security deductions are withheld once a year from the capital of vehicles in euros and at each redemption for units of account.
Now, most establishments offer free entry and exit fees, but some contracts still provide for penalties for early exit, the amount of which depends on the term of the contract at the time of redemption.
The beneficiary's steps to collect the capital of a life insurance
You can ask to be informed of the existence of a life insurance contract of which you are the beneficiary by contacting the Association for the Management of Information on Risk in Insurance (AGIRA).
As the presumed beneficiary, you must provide proof of the death of the insured by providing AGIRA with a death certificate. The latter then sends your request to the various insurers within 15 days, who in turn have 15 days to ask you to send them the documents necessary for the payment of the capital.
This capital must be paid to you within one month of receipt of the documents. Beyond the period of one month, the capital not returned to the beneficiary produces interest of 7.2% for 2 months and of 10.80% after the period of 2 months.
To note : The insurer is required to remit unpaid sums to the Caisse des Dépôts et Consignations (CDC) within 10 years from the date of knowledge of the death.
10 years after the death of the insured, the amounts are therefore transferred to the CDC. The beneficiary of the contract retains the possibility of carrying out an online search on the ciclade.fr site, specifying the name and first name of the deceased, his date of birth and his date of death. If the search for the beneficiary is successful, he recovers the capital.
Contrary to popular belief, life insurance is still available, even before 8 years. The subscriber can withdraw all or part of the sums saved when he sees fit.