Life insurance: its advantages in terms of taxation

If life insurance is the preferred savings product of the French, there are good reasons for it. Among them is undoubtedly its tax system.


What advantages does thelife insurance in terms of taxation ?

Are you considering making a money investment? Here is a savings product that is attracting more and more investors and that might interest you too. This is life insurance. If you are wondering why this product is interesting, find out in this article its taxation and you will be definitely convinced.

Understanding Life Insurance

Life insurance is a savings product that allows its subscriber to set aside money for the benefit of a person entitled. This means of placement is activated in two cases: survival and death. In these two cases, the life insurance taxation remains just as attractive. But before talking about it, let’s take a look at the said activation cases for this investment product:

  • The case of survival: we speak of survival when the subscriber is alive. At the end of his subscription, he is the appointed beneficiary of his investment. He will therefore recover the capital of his life insurance as well as the related interest.
  • The case of death: the death concerns a subscriber who dies. His investment will therefore go to a beneficiary that he will have previously designated in his contract. It can be his spouse, his child, his parents, a brother, a sister or another close relative.

For the management of this insurance contract, you have the choice between several options. You can choose between free management, delegated management and management under mandate. In free management, you decide exclusively on the administration of your savings. The investment choices for your life insurance are therefore a function of your assets, your objectives, the level of risk that suits you and the specific parameters of your finances.

On the other hand, if you opt for managed management, it is a third party who keeps your accounts and decides for you. Between these two options described above, there is management under mandate which allows you to authorize an agent to manage your insurance investments on the basis of the guidelines defined by you when establishing your contract.

Whatever the choice of management of your life insurance contract, you will know the favor of a particularly advantageous tax system. Exactly what is it?

The tax advantages of life insurance

The tax advantages of “life option” insurance products are numerous and are staggered according to the age of your contract. In clear terms, here are the various tax benefits that you can take advantage of during your “life option” insurance contract.

Tax benefits of life insurance during the contract

During your contract, if you decide to take all or part of your investment as an advance, your funds will not be taxed. On the other hand, if during the same life insurance contract you decide instead to make withdrawals, you will be taxed. But in the latter case, it will be a low tax. However, if said withdrawals are made within the first eight years of your contract, only your interest will be taxed.

Tax advantages of life insurance in the event of an inheritance

When the subscriber of the insurance is closed seventy years, the inheritance payments transmitted by the holder of the contract to each beneficiary are exempt from tax when their individual value does not exceed 152,500 euros.

On the other hand, if the subscriber of the life insurance contract is over seventy years of age, the cumulative transmissions that he makes for his beneficiaries are exempt when they are below 30,500 euros. However, only the capital is taxed and the interest exempt.

Tax advantages of life insurance in cases of force majeure

When you are faced with a situation of force majeure and you feel obliged to use your savings, legal tax provisions are designed to support you and ease your finances. What is it about ? Indeed, whatever the parameters of your life insurance contract, when your decision to withdraw is motivated by an incompressible emergency, your funds are exempt from taxation.

In this case, the situation of force majeure must be one of those provided for by law. These include situations of disability, dismissal, cessation of activity, etc.

Tax benefits of life insurance upon termination of the contract

If you choose to exit your insurance contract with a life annuity, you will be partially taxed 40% or 30%. The first tax index corresponds to the subscriber aged 60 to 69 years.

Conversely, for the holder of the life insurance contract over 69 years of age, the second index applies.

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