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“Finance law: Life insurance”
User manual and practical guide to fully understand how life insurance works and some tips to read before choosing a contract.
Life insurance is one of the favorite investments of the French, especially because of its tax advantages. But these are not the only interest of life insurance, which is also both a means of investment and a tool for transmitting wealth.
For many French people, life insurance is first and foremost a financial investment, the operating rules of which are relatively flexible.
When you take out life insurance, you are free to choose your investment medium: you can thus take out a contract in euros, a unit-linked contract (shares, etc.) or a multi-support contract (with both investments in euros and unit-linked investments, see the advantages of multi-vehicle contracts).
If you take out a contract in euros, the sums you pay will be guaranteed and increased by the interest provided for in the contract. Admittedly, the yields of contracts in euros have fallen considerably in recent years, but they yield much more than monetary products, while being also secure.
Above all, life insurance contracts allow a much wider range of supports than the Equity Savings Plan, which excludes bond investments, formula funds, investments in emerging countries, etc.
Life insurance can therefore be an interesting medium, provided you choose the right contract. You will need to consider both performance and the different charges applied. To fully understand the different criteria to be taken into account, see life insurance contract: costs and performance.
In the longer term, life insurance can also represent an asset support that goes well beyond simple investment. It makes it possible to optimize the transmission of one's assets, in particular by using the possibilities offered by the dismemberment of the beneficiary clause of a life insurance policy. This contract constitutes a legal tool of choice if you wish to favor a particular heir, life insurance not being subject to the usual rules of division of the inheritance. See how to benefit your spouse and children with life insurance.
In principle, the products of a life insurance are not exempt from tax (unlike those of the Livret A and the LDD, whose rate of remuneration is nevertheless very low). The contract is subject to a very specific tax regime, both in terms of income and inheritance tax. In the event of withdrawal, the taxation of the total or partial redemption of a life insurance policy is in particular the subject of very specific tax rules.
In matters of inheritance, this investment is subject to very favorable rules. The exemption from life insurance in the event of inheritance can thus be of considerable financial interest, but be aware that this advantage is not systematic and is limited to certain amounts, see thus inheritance tax on insurance. life.