Do you already have a life insurance policy? We must not stop there. Our columnist Gilles Belloir, general manager of Placement-direct.fr, explains to you why it is in your interest to subscribe to several.
The year 2022 was marked by the return to favor of the euro fund, the secure support for a life insurance contract . According to the ACPR (the Prudential Control and Regulation Authority), the average return, net of management fees but gross of social security contributions, stood at 2% this year, after 1.28% in 2021. But it is only an average. Some contracts have done much better, others less well.
By subscribing to several life insurance contracts, you can invest in several funds in euros and potentially benefit from the best of them.
In addition, each contract has its own range of unit -linked investment supports . Contracts are very well endowed with paper stone (OPCI, SCPI, SCI), some give pride of place to ETFs (also called trackers) or direct actions, others offer multiple managed management profiles… By having several contracts, you open your assets to a wider and more varied investment universe.
“You shouldn’t put all your eggs in one basket.” This proverb, well known to savers, also applies to life insurance. Having several contracts with various insurance companies allows you to better protect your savings if one of them experiences difficulties.
Since 1999, life insurance contracts have been covered by the Personal Insurance Guarantee Fund (FGAP). If ever an insurance company was no longer able to meet its commitments to policyholders, the fund would be mobilized, up to a limit of 70,000 euros per insured/insurer couple.
Taking out several contracts with different insurance companies is also a good way to increase the number of times this guarantee can be applied.
Life insurance: how to benefit now from the rise in rates?
When you want to have part of your savings to carry out a project, you make a withdrawal, which insurers call redemption. During this operation, only the portion of the gains contained in the redemption is taxed.
If a contract is at a loss in value it will not be subject to tax. And if a contract is in capital gain and is more than 8 years old, you will benefit from an annual reduction on earnings (4,600 euros, double for a married or PACS couple).
By having several life insurance contracts, you will be able to choose the one with the most lenient taxation.
Life insurance is a Swiss army knife that allows you to effectively prepare for many projects: a real estate purchase, children’s studies, retirement, transmission… But most often, these projects diverge in terms of the amount of savings to allocate and time horizon.
By devoting a life insurance contract to each of your projects, you will more easily manage the savings effort necessary to achieve it. Above all, you will control the investment horizon of each of your contracts and will therefore be able to achieve a more optimal asset allocation.
To avoid mixing the two rules within the same envelope, it is advisable to isolate payments made before and since September 27, 2017 into two separate contracts. The reasoning is the same for taxation in the event of death. The rule differs greatly depending on whether the payments were made before or after the age of 70 . Before age 70, each taxed beneficiary benefits from an allowance of 152,500 euros. Beyond that, it is a flat rate of 20% up to 852,500 euros, then 31.25%, which applies.
Life insurance, a good idea to pass on capital to your children?
After 70 years, only payments that exceed an allowance (common to taxed beneficiaries) of 30,500 euros are taxed. They then follow the classic scale of inheritance tax which depends on the relationship with the deceased.
As you will have understood, after age 70, it is also advisable to isolate your life insurance payments on a new contract.
Very often, the subscriber of a life insurance contract wishes, at his death, to protect his spouse. It is then generally the standard beneficiary clause that is retained. It provides that the spouse is the sole beneficiary of the contract, the children then being second-tier beneficiaries.
But will the spouse really need all the capital of the contract? But when the time comes, he will have only two options: to collect 100% of the capital or to step aside in favor of the children.
Properly drafting your life insurance beneficiary clause
To give it more flexibility, so-called “optional” beneficiary clauses exist. They allow the beneficiary to accept only a fraction of the capital (1/4, 1/3, etc.), the part not accepted then going to the second-tier beneficiaries. In practice, however, they are still difficult to implement.
A workaround solution then consists in taking out several contracts for the benefit of the same beneficiary.
