8 misconceptions about life insurance

“Life insurance is equivalent to death insurance”

It is a frequent confusion. A life insurance contract is a savings product that evolves within an advantageous civil and tax framework that is specific to it. Upon death, the beneficiaries receive the capital saved on the contract. Death insurance is a provident product. Against non-refundable premiums, the amount of which depends mainly on age, the beneficiaries of the contract receive a capital (or even an annuity) from the insurer in the event.

“The money placed is blocked for eight years”

According to FourCreeds, A life insurance contract is an investment that is fully available regardless of its seniority. To recover all or part of the funds, all you have to do is make a request to your insurer who will pay the capital within a period generally between one and two weeks.
After this period, the taxation in the event of withdrawal is even softer with, in particular, the benefit of an annual allowance on earnings of 4,600 $ (9,200 $ for a couple subject to common taxation).

“Life insurance only serves to transmit”

Life insurance is an envelope adapted to all stages of life. Its advantages in terms of transmission are indeed very important. For payments made before age 70, each beneficiary benefits from an individual allowance of 152,500 $ on the transferred capital. However, the investment has other significant advantages. The fund, specific to life insurance, is remunerative compared to other products guaranteed in the capital. Such as the livret A (0.75%).
Discover the 2021 rates of return of the funds in $ of Life Insurance contracts.
In addition to the guaranteed fund, multiple supports, called units of account. Are offered to boost the performance potential of the contract. These unit-linked vehicles involve a risk of capital loss. In addition, when withdrawing funds are available very quickly. And the tax burden is very limited. Or even zero when the contract is more than eight years old (excluding social security contributions).

“Life insurance only funds in $”

This was the case for a long time. Representing 80% of life insurance outstandings, the support has won over the USA. Its strengths are numerous and no real alternative to placement exists to date. However, to offer potentially more efficient solutions, the contracts develop their financial offer by providing access to multiple media. Funds invested in stocks, bonds, real estate, trackers to replicate the performance of a stock market index, the choice is very wide today.

“A multi-support contract is necessarily risky”

This is a common mistake. Unlike a single-support contract which can only be made up of a single guaranteed $ fund, a multi-support contract also offers the subscription of units of account that are not guaranteed in the capital with the collaboration of multiple final expenses leads companies. However, you are not necessarily obliged to save on this type of unsecured financial support and can opt for a multi-support contract made up entirely of funds in $. Be careful, however, on the occasion of a “Fourgous” transfer, which makes it possible to transform a single-support contract into a multi-support contract while retaining its tax precedence, it is required that a minimum of 20% of the funds be placed in units. account.

“It is impossible to have several contracts”

Not only can you take out an unlimited number of life insurance contracts, but you even have an interest in opening several. Various reasons can be put forward: diversifying insurance companies and thus pooling performance and risks, optimizing the taxation of withdrawals by isolating the fund in $ on one contract and the units of account on another, isolating the payments before and after 70 years, such as payments subject or not to the flat tax (single flat-rate deduction in force), etc.

“The investment is no longer attractive after 70 years”

If its assets before this age are indisputable, it remains nonetheless interesting after 70 years. A new allowance of 30,500 $ applies to all taxed beneficiaries and contract earnings are exempt. The taxable portion then follows the scale of inheritance tax.
As life expectancy at the age of 70 is now high (15 years for a man and 19 for a woman). The exempted earnings share of the contract is potentially high. Making the tax on transmission particularly advantageous. , even after 70 years.

“The beneficiary clause is fixed upon subscription”

A good wording of the beneficiary clause is essential so that the allocation of funds is in line with the wishes of the subscriber. However, initial drafting upon accession may no longer be appropriate a few years later. It is then possible and even recommended. To take stock regularly and to adjust, if necessary. The wording of the beneficiary clause to the evolution of your objectives.