A life insurance contract is a financial investment and a savings solution allowing the subscriber to build up and develop capital. The main feature of this investment is that it allows one or more beneficiaries to be designated in the event of the death of the insured. It then becomes an instrument for transmitting capital and protecting relatives.
The PACTE law provides for an incentive scheme for the transfer of funds invested in life insurance to new retirement savings plans (PER).
This possibility will be open until January 1, 2023, for contracts over 8 years old and for members over 5 years of the legal retirement age.
To find out more, visit our new section Retirement savings plan - Pacte Law
Definition of life insurance players
In order to fully understand how life insurance works, it is necessary to first define the terms used and the role of each:
The subscriber : is a natural person, of full age and capable, who signs the subscription form, chooses the characteristics of his contract and designates the beneficiary (ies) in the event of death
The insured : is the natural person on whom the risk guaranteed by the insurer is based. His death or his survival at a determined time conditions the service provided by the insurer. The insured is generally the same person as the policyholder
The beneficiary : in the event of life, this is the policyholder; in the event of death, this is the person (s) designated by the subscriber to receive the benefit provided in the event of the death of the insured
The insurer : is a legal person whose role is to cover the risk and to pay the guaranteed benefits if the risk occurs
Who can buy life insurance?
Anyone of full age can take out a life insurance policy . However, the subscriber must comply with the rules relating to the capacity to contract. For people placed under a legal protection regime (guardianship, curatorship, etc.), the subscription and management methods can be more or less restrictive:
For a person placed under a measure of safeguard of justice, the adult can subscribe and manage alone his contract. There is, however, an a posteriori protection system according to which all the acts performed can be called into question.
For people placed under curatorship, the protected adult can take out and manage a life insurance contract with the assistance of the curator. The latter assists the adult so as not to call into question the validity of the acts.
For persons placed under guardianship, the protected adult must be represented for all acts. He cannot therefore take out or manage the life insurance contract on his own. The authorization of the guardianship judge or the family council is necessary.
Finally, for young subscribers, minors : in the presence of both parents exercising parental authority, the terms of subscription and management of life insurance are quite simple since both can intervene. Since January 1, 2016, the parent exercising sole parental authority now has the same powers as the parents who exercise it jointly.
Where to buy life insurance?
The distribution methods of life insurance contracts are varied, but they are developed and guaranteed only by 3 types of structures that must have received state approval: insurance companies , mutual insurance companies and provident institutes .
What is special about life insurance?
Life insurance is an atypical investment thanks to the stipulation for others. This option makes it possible to designate one or more beneficiaries of the sums of money deposited in the event of the death of the insured.
What are the interests of life insurance?
- The life insurance contract can meet several needs:
- Build up savings
- Add value to existing savings
- Protect your loved ones by transmitting capital to a natural or legal person (for example, it is possible to designate an association to benefit from your contract)
- Provide a guarantee for a loan
- Prepare additional future income (for example for retirement)
- Receive immediate additional income by setting up scheduled buybacks or an annuity
What are the advantages of life insurance?
Life insurance has several advantages:
This is an investment that offers flexible savings conditions : the initial payments are often low and additional, free payments are possible while respecting the minimum payment imposed by the general conditions.
It is an evolving investment that can adapt to an investment horizon, to changes in the insured's objectives and priorities and to his risk tolerance.
Savings remain available; it is possible to make withdrawals, called surrenders , partial or to surrender the entire contract at any time. The money is not blocked (except specific supports). The brake that sometimes exists is the taxation that will eventually be due on the products contained in the redemption carried out.
In the event of death , life insurance is an investment outside inheritance , in fact, according to the insurance code, the capital or the stipulated annuity (s) payable (s) on the death of the insured to a specific beneficiary or to his heirs are not part of the insured's estate, they are 'outside the estate'. Life insurance also makes it possible to favor one or more relatives of the insured subscriber, even outside the family circle.
When to buy life insurance
There is no minimum or ideal age required to purchase a life insurance policy . Depending on the objective, the needs and the age of the subscriber, the contract may be set up in order to cover his beneficiaries, to build up capital by starting the construction of a heritage, to benefit from an advantageous tax system. , etc.
Until what age can you take out life insurance?
Just like the fact that there is no minimum age to purchase a life insurance policy, there is no maximum age either. It is important to note that at the threshold of the subscriber's 70 years , the tax regime of the life insurance contract changes.
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