Insurance your small business

From Innovation, Science and Economic Development Canada

Good commercial insurance can give you peace of mind both personally and professionally.

Contents

Why do I need commercial insurance?

Types of insurance

Take good insurance for your business

Why do I need commercial insurance?

Your business may have many assets: vehicles, offices and equipment, stocks, employees or partners, and greatest importantly, yourself. To guard these assets and your business against potential risks, you must obtain insurance.

All companies take risks, but taking too much or neglecting to protect yourself is not a good idea from a business perspective. Could your business survive if one of your partners dies or becomes disabled? Would you have sufficient cash to deal with an alternative situation in your company? Actual often, the answer to these problems and other queries about risk is "no."

This text will help you understand the many types of insurance that exist to protect you and your business from any liability related litigation.

Types of insurance

Insurance needs vary widely, and it is best to seek the advice of a broker or insurance agent who is conversant with your kind of business. Below are various types of insurance that may apply to your business.

Insurance for Owners, Partners, and Key Employees

The loss of a key person can have devastating effects on your business and your livelihood. Various types of insurance can help protect your business and family from potential risks:

Life Insurance - This insurance protects your family in case something happens to you. It is particularly crucial for individual companies because the owner is personally liable for all of the company's debts.

Disability Insurance - This insurance provides income for a period if you can not work because of an injury or illness.

Associate Insurance or Associate Share Buyback Contract - This insurance delivers you with the essential funds to buy back the share of one of your associates if it dies, thereby continuing to operate your business.

Critical Illness Insurance - This insurance provides you with a lump sum benefit if you have a critical illness.

Employee Insurance - If you rely on certain key people to help run your business, it would be useful to protect yourself against the loss of these people.

Ask your accountant which insurances are deductible as business expenses and which ones you will have to pay for yourself as an individual.

Insurance for commercial properties and income

You must protect your assets and income in the event of a disaster or emergency that destroys some or all of your company's premises and assets. Here are the different types of insurance you can get:

Property Insurance - This insurance will cover the property and buildings of your company in the event of destruction or damage caused by elements such as fire and other disasters.

Personal Insurance - This insurance covers the goods you store on your company's premises. If you are a renter, the owner probably has property insurance, but you are most likely to have your property insurance. If you operate your home business, you will likely need separate insurance for your business assets.

Business interruption insurance - If you have to temporarily close your business because of a fire or other disaster, this insurance will cover your loss of income until your business resumes.

Vehicle Damage Insurance - You will have to ensure all cars in your commercial. If you use individual vehicles for profitable purposes, do not forget to inform your insurance company.

Liability insurance

Errors can occur. You, your staffs, your gear or your dealers could be the source of errors that could hurt your customers, employees or any other person doing business with you. To protect your business from legal action, should this happen, you should consider purchasing these types of insurance to limit your liability:

General Liability - This insurance covers the risk of injury to your customers and employees on your premises.

Product Liability - This insurance provides coverage if your products are defective or cause serious injury to their users.

Professional Liability - This insurance protects you if a client sues you for error, omission or negligence while performance qualified facilities.

Cyber Liability - Defends in the incident of a lawsuit arising from a breach of electronic security that involves the compromise of personal or business information. This may include situations related to the theft of devices containing organizational, customer and employee data or similar data.

Accounts Receivable Insurance

A customer who does not pay can put you in a bad situation. You consume to pay your staffs and providers, and you are stuck because you have to pay for the goods without getting the corresponding income. This insurance, also known as credit insurance, can protect you if a customer goes bankrupt or refuses to pay.

Risks are often higher when it comes to export markets. The government provides export insurance services, including accounts receivable insurance, to cover a range of uncertainty.

EDC Credit Insurance - Portfolio

Ensure your accounts receivable against business risks.

Health Insurance

Providing that health insurance to your workers can be a vital factor in employing and retentive employees. You can request information from a broker or insurance company about group plans that provide extended health and dental benefits for your employees.

Take good insurance for business

Being assured concerning uncontainable the proper insurance for your professional will provide you with concord of mind. To discussion doable insurance choices for your business, interaction an insurance agent to help you find or implement a plan that suits you and your business. You can also contact your local Chamber of Commerce or Industrial Association; some organizations offer their members lower rates for their commercial insurance.

Insurance Bureau of Canada - Business Insurance

Having the right insurance could be essential to the survival of your business. Check out the options that are available to you.

Key factors for the success of online insurance

What are the strategic parameters that a company must master to succeed in the online insurance market via the internet? In additional arguments, pardon are the key success factors (FCS) that condition a company's success over its competitors? It is essential for a company to identify the FCS that govern the sector in which it operates, this allows it to understand which levers it will have to act to be efficient.

So, let's identify the key success factors that will enable a company to compete in the online insurance market.

BRAND AWARENESS

 As a first step, the notion of "brand" is a decisive factor that will take into account the consumer to choose his insurance online. Awareness of the brand is indeed an essential component that determines the trust a consumer will give to a website. Aware of this key factor of success, some insurers like Macif have chosen an umbrella brand strategy. Keeping Macif in the name of its web brand "IdMacif" the mutual demonstrates that the weight of the brand is essential.

The new brand "IdMacif" thus benefits from the reputation and image of the umbrella brand. This strategy offers many advantages; it allows in particular not to push back the dead point until the brand is known. It also makes it possible to divide by three the investments in communication. Moreover, if the risk of cannibalization exists as on any market, it seems low.

PRICE AND INSURANCE RATES

The price is the first criterion for choosing an insurance product on the internet. As we have seen previously, the online insurance market assumes in most cases a price positioning. Insurance comparators, which are becoming more numerous, accentuate this trend by making it possible to quickly compare several insurances on different criteria, notably that of the price.

To be competitive in the online insurance market via the internet, the insurer must provide powerful underwriting tools and offer very low prices while maintaining the technical result. It seems that players already well established "off-line" are more likely to enjoy a strong and sustainable competitive advantage.

THE QUALITY OF THE OFFER AND THE MANAGEMENT OF THE SERVICE

As with any purchase, quality remains a central element in the selection criteria. Indeed, even if the positioning is often low cost, the level of quality of the offer must follow and meet a certain level of requirement. Regarding insurance, assistant services often reflect the level of quality of the product offer. The more comprehensive the support services, the more efficient and quality assurance to the consumer.

As a result, online services are becoming more comprehensive, and the insured can easily manage his online options via the interface of his account. The quality of management is also a key element for the consumer since it is one of the few contacts he will have with his insurer. It is important for the insurer to communicate on the quality of this management, particularly by highlighting the reputation of the parent brand.

Auto insurance

Ensure your car is mandatory. In addition to the legal obligation, insurers offer optional guarantees to subscribe according to your specific needs. To be well insured, it is also necessary to respect certain rules, at the time of the subscription of the contract, during the contract and in prevention.

Compulsory car insurance: the civil liability guarantee

The only compulsory insurance in the car, the third-party liability insurance allows compensation for damage caused to third parties by the fault of the driver of the vehicle or one of his passengers:

injury or death of a pedestrian, passenger, or occupant of another vehicle;

damage to other cars, two-wheelers, buildings ...

This civil liability warranty covers authorized or unauthorized drivers. However, after compensating the victims, the insurer may have recourse against unauthorized drivers.

Failure to comply with this insurance obligation constitutes an offense. A fine, but also a license suspension and a vehicle impoundment can be applied.

In order to enable the enforcement authorities to comply with this legal obligation, the insurance certificate (or sticker) must be affixed to the windshield of the vehicle. In addition, the insurance certificate or green card may also be subject to verification.

This obligation of insurance applies even if the vehicle does not circulate, for example when it is stored in your garage.

Optional auto insurance

Damage to the car

•             The damage guarantee all accidents

It covers all material damage to the vehicle, regardless of the type of accident or the fault committed by its driver.

•             Collision damage warranty

It only plays in the event of a collision with a pedestrian, another vehicle or an animal whose owner is identified.

Most contracts exclude from the benefit of the damage cover all accidents and collision damage drivers who have used drugs or who are tested with a blood alcohol level in excess of the authorized limits.

•             Theft and fire insurance of the vehicle

They allow you to receive compensation equal to the value of the vehicle on the day of the fire or theft, or to a value specified in the insurance contract.

In principle, the fire warranty also includes compensation for the consequences of an explosion, the fall of lightning or spontaneous combustion.

The insurance contract defines the conditions of application of the theft guarantee and the terms of compensation. The insurer may require preventive measures against theft (setting an alarm, setting up a circuit breaker to prevent starting, engraving on all the windows of the registration or serial number, accompanied by a registration of the vehicle on a file accessible to the police, delivery of the vehicle at night in a locked garage).

In the event of theft, compensation is paid after the period indicated in the insurance contract (usually thirty days). If the vehicle is found during this period, compensation for any damage caused by the thief is provided.

Vandalism may be covered as an appendix to the theft guarantee, subject to varying limits depending on the contract.

•             Ice break guarantee

It covers damage to the windshield and can also extend to side windows, sunroofs, rear window, headlamps and mirrors.

•             The most common options

Some extra-serial accessories (phone, roof box ...) are not always supported. To benefit from any insurance cover, they must be declared to the insurer at the time of the subscription of the contract or their installation.

Some contracts pay for new cars at their purchase price for six months or more, others cover cars at their purchase price for one or two years after acquisition regardless of their age. This guarantee option, which provides for a minimum of compensation for a certain period, makes it possible to increase the situations in which the vehicle can be repaired.

The contents of the vehicle (clothing and personal effects mainly) can also be guaranteed within certain limits and under certain conditions.

The loan of a replacement vehicle is also possible under certain conditions.

•             Guarantees attached to optional damage warranties

If the contract includes a vehicle damage guarantee (all accidents, collision damage, theft, fire ...), the vehicle is automatically covered in case of natural disaster, technological disaster, storm, and attack. If only the guarantee "Best auto insurance companies in USA" is subscribed, the benefit of these guarantees will be limited to the elements corresponding to the definition of the breaking of windows (most often windshield and sometimes side windows, sunroof windows, rear window headlights, and mirrors).

                    - The natural disaster guarantee: If the vehicle is insured for the damage caused by a natural disaster (flood, avalanche, earthquake ...), this guarantee is published after publication in the Official Journal of the interministerial decree observing the state of natural disaster. A deductible of 380 euros is applicable.

                    - The technological disasters guarantee: The technological disasters guarantee covers damages resulting from technological disasters that have been the subject of a decree in the Official Journal. The damage is then settled without a deductible.

                    - The storm guarantee: The damages caused by the storm (wind effects) are compensated.

                    - The guarantee bombing an act of terrorism: The guarantee bomb covers the damage resulting from acts of terrorism and attacks committed on the national territory.

•             Guarantees not attached to optional damage warranties

                    - The guarantee riots and popular movements:  Unlike the guarantee of attack, it is not necessarily acquired. However many contracts offer the possibility of guaranteeing the vehicles for the damage resulting from a riot or a popular movement.

                   - Guarantees forces of nature:  The car insurance contracts sometimes include a guarantee forces of nature, which plays in case of natural events not officially declared natural disasters.

The driver's guarantee

When the driver is injured in a traffic accident in which he is at fault or in which no manager is designated, the driver's guarantee allows him to be compensated.

For example, this guarantee supports, according to the insurance contracts:

•             medical, surgical, pharmaceutical, hospitalization and prosthetic expenses;

•             the financial loss associated with a work stoppage or permanent disability;

•             the loss of the beneficiaries following the death.

Insurers offer two guarantee formulas:

•             lump sum type, with capital fixed by the contract in case of permanent disability or death. In the absence of specific contract details, the benefits are in addition to the indemnities that a responsible third party may pay;

•             indemnity type, with compensation for all the injury of the insured; sometimes there are guarantee ceilings and a deductible.

Service Guarantees

The legal protection guarantee

The legal protection guarantee can be offered either by the car insurance contractor in an autonomous contract. Different levels of guarantee can be offered:

•             the criminal defense guarantee and recourse following an accident;

•             the segmented legal protection guarantee, which covers a specific area of intervention such as automobile legal protection;

•             the guarantee of general legal protection, which covers several areas so as to cover most of the disputes that the insured person is confronted with.

The assistance guarantee: for the vehicle and for the passengers

This guarantee can be repaired and towed in case of breakdown or accident.

Many insurance contracts also include the shipment of spare parts, accommodation fees for the duration of the repair or driving to a destination, the cost of recovering the vehicle and the payment of a deposit abroad.

Passenger assistance usually includes repatriation in case of accident or illness, reimbursement of medical expenses incurred abroad, repatriation of the body in case of death.

It should be checked whether there is a mileage deductible in the event of a breakdown and whether the assistance services apply in the foreign countries crossed. The assistance company provides itself the service of these benefits in kind on simple telephone call after checking the existence of the guarantee.

What is important in the auto insurance contract?

A contract is chosen according to the coverage and therefore the guarantees it offers. Make sure, before taking out a car insurance contract, about the number and nature of the guarantees in order to know your rights of compensation in case of disaster. Once the contract is subscribed, know that you can consult it at any time (some insurers, such as L'olivier, allow you to do it online, via a personalized customer area ). All the provisions are specified in the clauses of the contract!

The different insurance formulas

There are several types of contracts. These formulas offer more or less extensive guarantees:

The minimum guarantee required by the law is the insurance liability also called third party insurance. It covers, in particular, the bodily injury and material damage caused to a third party during a disaster.

The All Risks Insurance is a more comprehensive auto insurance package that offers you a wide range of cover for all types of claims.

There are also intermediate formulas halfway between the one-third formula and all risks. For the motorists, these formulas represent a good compromise.

What criteria must be taken into account when choosing an auto insurance?

So how to choose? The first thing to do is to clearly define your needs. It is important to determine the value of your car. For that, several criteria can be taken into account as the age, its mileage or its value on the market (Cote Argus). Naturally, the value of a new car will be greater than that of an old car, more than 10 years old with more than 250,000 kilometers on the clock.

It is also important to clearly define the use you make of it. We do not do the same thing if we drive every day to work or drive only occasionally. For example, if your car is purring in your garage, the risk of loss is lower; it is, therefore, more interesting for you to ensure the third party.

Are you still hesitating between the two formulas? Read our file Third-party insurance or All-risk insurance: how to choose the right formula?

What prices are charged by insurance?

The calculation of the amount of your car insurance policy, or premium, is based on the number of guarantees desired to insure your car, on the one hand, and on the other hand, a whole bunch of criteria relating to the driver. and which establishes the risk that the driver represents for the insurer (age of the vehicle, the nature of the trips made, number of claims accumulated over the years ...).

You will, therefore, pay more if you are a young driver seeking to ensure all risks than if you are a long-time driver, with a vehicle over 10 years, seeking to ensure the third.

Life insurance as an investment

Occasionally we hear about life insurance as an investment tool. As I have already mentioned, the use of a life insurance policy for retirement with a collateral loan strategy (movable mortgage) requires great caution. However, when we talk about the generation next, it's different. If there is a will to inherit, it is then possible to consider a life insurance policy as an "investment" tool. With an additional uncertainty component relating to when the death benefit will be received, this tool is a kind of "fixed income".

I often see illustrations of the returns generated by a life insurance policy. In fact, it is a comparison of the return that would be required in a traditional investment tool to generate the same after-tax amount (capital) as that of life insurance.

If the policy is considered to be in the fixed-income category, the alternative tool may be a Guaranteed Investment Certificate (GIC). Otherwise, any income breakdown can be applied to this comparison product. I will call this return the internal rate of return (IRR) by the end of the article.

Hard to beat

Such illustrations show that the IRR thus calculated is often very difficult to beat, even at an advanced age of death, especially when compared with a GIC. One of the reasons is taxation.

A life insurance policy is, at a certain level, a tax equivalent of the TFSA. We pay premiums and we will receive a non-taxable death benefit one day. Thus, when the TFSA space is full, investing in a life insurance produces essentially the same tax effects as unlocking the TFSA limit.

Of course, when we talk about fixed income, it's just the amounts involved ... The death benefit will be received with certainty, but we do not know when. A policy taken on the head of a person currently 70 years of age is likely to pay the death benefit in 30 years ... but it can also be paid within two years.

The illustrations should show the IRR for each year. Obviously, this return will decrease with time. The sooner the death benefit is paid, the higher the return. Imagine the return that would be needed after one year to get a $ 1 million principal if we only paid one $ 50,000 bonus ...

As I said, illustrated IRRs are often interesting up to a very advanced age of death. For example, the IRR may be equal to more than 3% per year even if the insured dies at age 100.

Beneficial for companies

Moreover, if it is a corporation that subscribes to the policy, the IRR is even higher. In order to avoid a taxable benefit to the shareholder, the company must be beneficiary of the policy.

Upon death, the Company's Capital Dividend Account (CDA), which pays a non-taxable dividend to shareholders, is increased by the death benefit less the policy's adjusted cost base (ACB). CBR must, therefore, be taken into account in the illustrations because a portion of the dividend paid out of the death benefit will be taxable if the CBR is not nil. Nevertheless, the IRR is often very interesting, especially if the insured persons are not subject to surcharges.

In addition to the age of death and taxation, the other main reasons that a life insurance generates an attractive IRR are:

The return obtained by the insurer. The insurer invests the sums in reserve until death in long-term investments.

Premium rates. In order to be as competitive as possible in its premium rates, the insurer takes into account a factor known as a lapse. The insurer thus takes into account the fact that some of the insureds will not keep their long-term contract and cancel it before the death. In fact, the lapse rate is the basis of the difference in premiums between a life insurance policy with cash surrender value and a 100-year temporary policy.

Risks of loss

In addition to the fact that this strategy is interesting in many cases, it involves almost no risk. Indeed, the main risk is the non-payment of the premium. Of course, if a policy is abandoned before the death benefit is received, the premiums are simply lost, generating a return of -100% ... For this reason, a policy with a limited payment term may be preferred.

The risk of losing its capital in a bankruptcy of the insurer, meanwhile, is so low that it can be virtually ignored.

Finally, the risk of seeing the insured person die at a very advanced age - thus making it more profitable to invest the premiums in any one account - is not a risk of losing money, but rather of realizing a lower return than other possibilities.

Attention to the need for insurance

Although this strategy does not cause any legal or tax problems, insurers will still want to see a link between the amount of the death benefit and the assets of the insured. Again, it's case by case.

Understanding life insurance

Understanding life insurance is rather important because, in France, life insurance is the savings product par excellence because it alone accounts for nearly 40% of the outstanding savings of French households. So we try to simply explain the operation to understand life insurance and tried to give the best ranking through our comparator life insurance.

The origins

To understand life insurance, we must go back to a very distant history and some writings that refer to it from the 14th century. This is where his name came from because in the first place it was an insurance that guaranteed the life of the sailors and, in the event of death, paid back to the surviving dependents.

If you are simply looking to get the best ranking without the need to understand life insurance, here are the elements:

Understanding life insurance: the principles

Life insurance is a regulated savings product that has many benefits but also a multitude of options and potentially offers a reduced tax, this is what we will see to understand life insurance. For those who are familiar here is the link Wikipedia life insurance but the definitions are very comprehensive. No less complete but can bring the legal seal, here you will find the detailed sheet given by the public service to understand life insurance.

What type of placement

Life insurance is a savings investment that subscribes to a financial institution. You will have to pay at the opening a minimum amount then you will have the freedom to pay money when you wish.

At the opening, you will have to designate one or more beneficiaries who will receive the amount of your savings plus a possible premium in the event that you die while your life insurance is still in progress. It is advisable to designate several beneficiaries with possibly a notion of priority. Note that you can change the content of the beneficiaries at any time.

But to understand life insurance, know that if nothing happens to you during the life of your life insurance policy, you will recover the amount of it. And that's still the general principle.

 

Understanding the types of life insurance policies

In France, to understand life insurance and save well, it is important to remember that two types of contracts exist:

·         the contracts in euros or mono support contract

·         One and only one background: 1 euro support

·         The product is therefore risk-free and the savings can only increase.

·         This is the privileged contract of the French.

·         unit-linked multi-media contracts

·         This contract can be composed of different funds: support euros and/or units of account.

·         The higher the units of account share in the contract, the greater the risk associated with the contract. We must understand life insurance as a contract whose capital is not guaranteed in this case.

Understanding life insurance: the different options

Your investor profile

Frequently, a test to assess your risk aversion is offered to you when you open a life insurance policy. Do this test (which will be offered by our selected partners, for example, life insurance Boursorama but the others too) because the results will show you the management profile that is most suitable for you.

Understanding life insurance: the different options

Your investor profile

Frequently, a test to assess your risk aversion is offered to you when you open a life insurance policy. Do this test (which will be offered by our selected partners, for example, life insurance Boursorama but the others too) because the results will show you the management profile that is most suitable for you.

prudent profile: the majority of savings invested in euro support

balance profile: around 50% in euros and 50% in units of account

dynamic profile: a majority of savings invested in units of account

It should be noted that the more you take risks, the greater the risk of losses, but on the other hand the higher the expectations of gains. If you go on the riskier profiles, it is no longer a question for you to understand life insurance but it is that you already master it completely.

Management mode

Some companies offer different types of management for their life insurance.

Understanding life insurance and how it is managed means understanding that a ready-to-use contract will be offered based on your knowledge, time and risk aversion.

free management: it is you who manage in total freedom your contract and the funds on which you wish to invest, it is you who can help us to better understand life insurance!

streamlined management: you let the financial experts choose the funds that best match your investor profile.

management under mandate or delegated management: you completely delegate your management to a specialist and you sign a bi-partite contract with him with conditions and objectives. Historically intended for high-end customers, this management method has become more democratic and is now eligible for a larger number (under conditions). For example, we have Fortunéo who proposes it under certain minimum conditions

Each company can name these management methods differently but to understand life insurance, know that generally, these are the most frequent names.

Understanding Life Insurance: Taxation

Compared with PEA or stock market transactions, life insurance has a rather advantageous tax system.

The taxation is different depending on the number of years you leave your money placed on your life insurance. But as soon as you open a life insurance, the more you get a tax envelope. That is, the time begins to count down when the product is opened, regardless of how much money is on it. You can, therefore, benefit from your seniority.

If you withdraw your money between 0 and 8 years after opening your contract.

The capital gains that you have realized on your contract will be subject by default to the progressive income tax. Nevertheless, depending on your tax status, you can opt for the mandatory flat-rate deduction:

from 0 to 4 years: 35% of capital gains

from 5 to 8 years: 15% of capital gains

If you withdraw your money 8 years after the opening of your life insurance policy, include life insurance and its tax benefit, your capital gains are tax-exempt up to the limit of:

4,600 euros a year if you are single, divorced or widowed.

9 200 euros a year if you are a couple.

If you exceed these thresholds, your capital gains will be subject according to your choice to your income tax or to the flat rate deduction at the rate of 7.5%.

Since 2012, capital gains on life insurance contracts have been subject to social security contributions of 15.5%. Note that life insurance also provides benefits in the event of death.

Fees

4 types of fees:

Fees

They are increasingly rare, they are fees that are related to the opening of a life insurance policy.

Payment fees or entrance fees

They are deducted at the time of each new payment on one of your life insurance media.

Arbitration costs

They are deducted at each transfer of a support to another support of your life insurance. These support transfers are called arbitration. To understand life insurance and arbitration fees, you just have to imagine that you will be able to change your investment fund along the way.

Management fees

They are usually collected every year and are proportional to your savings amount.

These fees are an important part of the total costs and must be a key element of comparison between different life insurance. To fully understand life insurance, you should pay particular attention to those fees that will apply each year to all of your principal.

The life insurance market

In France, according to the FSA's 2013 insurance balance sheet, life insurance is:

120 billion euros in collections: 103 in euros and 17 in units of account

an outstanding amount of 1463 billion euros, of which 1203 in euros (82%)

To understand digital life insurance, many reports and studies are available on their website.

The main actors

The product is also interesting for insurance banks because it allows them to have more equity. This is why almost all insurer banks offer this product.

In France, the main actors are:

traditional banks: Crédit Agricole, BNP Paribas, Society General, etc.

Banks online: Boursorama, ING Direct, Fortune, etc.

insurers: AXA, CNP, Generali, etc.

How does life insurance work?

A long-term savings product par excellence, life insurance is one of the investments favored by the French. In addition to its more interesting performance than some conventional products, its taxation is advantageous, especially after a few years. Zoom on its operation.

Basic Principles of Life Insurance

Life insurance is a savings product purchased from a bank or an insurance company.

The insured is usually the subscriber, but not necessarily. Indeed, it is possible to open a life insurance policy on behalf of someone else (one of your children for example).

You can :

·         either recover your capital and the product of your interests via partial or total redemptions.

·         designate beneficiaries who will benefit from the capital if you die before the end of the contract.

Several formulas available

When you subscribe to your life insurance policy, you will be able to choose between different types of support that differ in their risk levels and their profitability. You have the choice between:

·         a fund in euros. Main advantage: its capital is guaranteed and this formula is therefore safer. Nevertheless, its profitability is moderate and should return below the 2% mark in 2016.

·         a unit-linked fund. Main advantage: its profitability is much better than that of the fund in euros but its capital is not guaranteed. It is, therefore, more subject to market fluctuations.

·         a mixed fund. Main advantage: it allows to mix the two funds mentioned above, and to have a profitability superior to the fund in euros without taking too much risks.

How to feed a life insurance contract?

You can choose to make:

·         of periodic payments (monthly, quarterly or annually), and agreed in advance with your insurer. In addition, nothing prevents you from making additional payments if you wish.

·         of flexible premiums. In this case, it is you who feed the contract when you want and with the amounts of your choice. You will nevertheless need to check whether your contract involves minimum payments or not

·         of single payments. In this case, the payment is made at once during the subscription.

How to collect one's capital?

To collect your enriched capital from interest income, you can:

·         make a total surrender and withdraw all of your capital

·         carry out partial redemptions. They consist of withdrawing some of the money while leaving the rest of the capital producing interest. You can also define the regularity of these payments and schedule their frequency (monthly, quarterly ...)

·         collect a life annuity. This can be particularly useful if you are retired. You will receive monthly or quarterly income supplements until the end of your life

Taxation: two possible methods of taxation

Be aware that when you make total or partial surrenders (withdrawals), the interest generated by your contract is taxable. You can either  :

·         integrate them into your income tax.

·         opt for the  flat-rate discharge

·         The choice you make depends on your marginal tax rate  :

·         if the latter is lower than the flat-rate lump-sum tax rate , it will be more appropriate to opt for income tax.

·         if it is  higher than the flat-rate lump-sum discharge rate, opt for the flat-rate lump-sum deduction  will be more judicious

 

An advantageous tax system over time

The date of withdrawal has an influence on taxation. The longer you wait a long time after the opening of the contract to redeem, the more beneficial the tax system will be . So for a redemption:

·         before 4 years, the flat-rate discharge is 35%

·         between 4 and 8 years old , it is 15%

·         after 8 years, it is 7.5%

Be aware that in all cases, these interests will also be subject to social security contributions of 15.5% .

Finally, after the eighth year of the contract, you can also be exempt from tax within the limit of:

·         4,600 euros in interest if you are a single , widowed or divorced taxpayer

·         9,200 euros of interest if you are a taxpayer married and pacsé subject to  joint taxation