Representing a means of saving for French households, life insurance promises significant tax advantages. It is a form of financial investment that allows beneficiaries to receive a sum of money when an event occurs, in particular the death of the subscriber. Many questions then arise when we talk about an insurance contract. But, the most frequent question is: how much will you get from this contract?
What is life insurance? How does it work exactly?
The majority of French people decide to take out an insurance contract thanks to the many advantages it promises. By definition, this insurance translates into a savings product allowing the insured person to benefit from several interests. The latter generally depend on the capital invested.
The operation of an insurance contract remains simple. Once you have purchased this type of insurance, you are the primary beneficiary as well as the primary owner of your funds. You have the option of recovering your investment with interest at the end of your contract. In the event of death, the contract is dissolved and the sum with interest will be transferred directly to the beneficiaries you have chosen.
What type of contract to choose for your insurance?
If you have decided to take out life insurance, you have two types of contracts. To inform you about the different kinds of contract, you can see this specialized site.
The multi-support contract
For a multi-support contract, your placement will be used as an investment for products related to the stock market such as stocks, bonds, funds, etc. The payments you have made become units of account on the financial market. Despite the remuneration that you can obtain, this type of contract involves many risks.
The mono-support contract in euros
This life insurance policy is a simple investment that allows you to revalue the sums invested each year. The investment products are government bonds. Unlike the previous contract, your capital is guaranteed with interest.
The benefits of choosing life insurance
Classified as a multifunctional savings product, insurance is effective when you want to grow your capital. The French make the decision to invest in this type of investment as preparation for retirement and precautionary savings. If you have children and a spouse, know that they can become the first beneficiaries of your insurance contract. The latter therefore becomes an exceptional asset tool, because you can pass on your capital by inheritance. The privilege of insurance is that you are free to choose the beneficiary. Whether it’s your grandchildren, your children or your spouse, the beneficiaries can also be people who are not part of your family.
Life insurance and taxation
Taxation represents an important advantage of choosing an insurance contract. If you do not make a withdrawal during the entirety of your contract, the income received is not taxed. When you decide to make a redemption, either partial or total, your interest will be subject to taxes.
Regarding taxation, only interest generated by payments from September 27, 2017 is subject to the PFU or single flat-rate levy. When the withdrawal is made on a contract less than 8 years old, interest is subject to the same scale as income tax. The tax percentage is 15% for 4 to 8 years and 35% when the deduction is made over 4 years.
Regarding contracts dating back more than 8 years, interest is imposed by the flat-rate discharge with a percentage of 7.5%.
How much can you get for life insurance?
Since this is a savings product, you are making an investment that earns interest. It should be noted that the subscriber is able to withdraw his money at any time by making a redemption. Regarding the payment of premiums, the treatment of taxation influences the amount received by the beneficiaries. For money invested before age 70, the subscriber or beneficiary should expect a deduction of 152,500 euros on the capital. For a sum of money paid after the age of 70, the allowance applied is 30,500 euros per beneficiary. You should therefore expect these allowances with the percentage imposed on the capital.