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
No comments:
Post a Comment