The French love life insurance because of its advantages, and because of the heritage that it has earned. It is important to distinguish life insurance from death insurance, because the latter is a specific contract where the insurer must pay capital to the beneficiaries in the event of the subscriber’s death before an agreed date.
Life insurance then mainly serves as a savings contract in anticipation of retirement, a project, or the death of the insured. Knowing that the latter can withdraw his capital at any time, as well as the interest associated with it.
Life insurance investment supports
There are two types of life insurance contract: funds in Euros which are then a single-support contract and units of account for a multi-support contract.
The single-support life insurance contract
With the only choice being funded in Euros, it is a so-called risk-free investment because it is not possible to lose money. Indeed, we can distinguish what is called the “ratchet effect”, the principle of which is that acquired interests are acquired for good. An annual return can be fixed in advance, in most cases with a “guaranteed minimum rate”.
The multi-support contract
In addition to the funds in Euros still present, we find units of account (shares, bonds or real estate). More advantages, but also more risks incurred with this type of contract, thanks to multiple possible investments in different financial and real estate markets. Preventing market fluctuations and rebalancing the portfolio remains possible by placing funds in Euros. In particular, you will be able to make your life insurance investment in financial assets such as a UCITS (Organization for Collective Investment in Transferable Securities), an Investment Company with Variable Capital (SICAV), Mutual Funds (FCP) and many others Again.
Other important data about life insurance
Duration of a life insurance contract
No legal duration is known for life insurance placement, it can be set freely and renewed if necessary.
Life insurance and investment placement
Three forms of payments are possible within the framework of this investment, namely the initial payment which constitutes the starting fund (upon subscription), the free payment which the insured can make whenever he wishes and the scheduled payment where he is involved in debiting a given sum at a specific frequency from the subscriber’s account, these two parameters being able to be modified at any time.
Fees and management
As part of a life insurance investment, it is necessary to pay entry fees, management fees collected by the insurer, and arbitration fees during fund transfers.
Life insurance investment lends itself to free management by the insured himself, management led by a broker, or management under mandate by an approved company.
Life insurance payment conditions
Taxes only concern life insurance contract products when the latter is surrendered. Social security contributions are obligatory, progressively for funds in Euros, or up to 17.2% on the fund invested in units of account.
Conclusion
life insurance serves as both a protection and investment tool, offering financial security and peace of mind to policyholders and their beneficiaries. Throughout this discussion, we’ve explored the fundamental principles and considerations of life insurance investment, highlighting its significance in long-term financial planning.
Dual Purpose: Life insurance provides a dual benefit of financial protection against the risk of premature death and a vehicle for long-term savings and investment.
Types of Life Insurance: Term life insurance offers straightforward protection for a specified period, while permanent life insurance,
Cash Value Accumulation: The cash value component of permanent life insurance policies grows tax-deferred, allowing policyholders to build a savings reserve that can be accessed during their lifetime through policy loans or withdrawals.
Investment Options: Policyholders can choose from various investment options within permanent life insurance policies, such as fixed interest accounts, variable accounts tied to market performance, or indexed accounts linked to specific market indices.
Risk Management: Life insurance investment involves balancing risk and return, with conservative investment strategies typically associated with guaranteed policies and potentially higher returns with variable or indexed policies.
Tax Advantages: Life insurance offers several tax advantages, including tax-deferred growth of cash value, tax-free death benefits for beneficiaries, and the ability to access cash value on a tax-advantaged basis through policy loans or withdrawals.
Flexibility and Customization: Life insurance policies can be tailored to meet individual needs and preferences, with options to adjust coverage amounts, premium payments, investment allocations, and beneficiary designations over time.
Financial Security and Peace of Mind: Ultimately, life insurance investment provides policyholders with the confidence that their loved ones will be financially protected in the event of their death while also offering opportunities for wealth accumulation and legacy planning during their lifetime.
Summary
life insurance investment offers a comprehensive solution for individuals seeking both protection and growth of their financial assets. By understanding the principles and considerations of life insurance investment, individuals can make informed decisions to safeguard their financial future and provide for their loved one’s long-term well-being