LIFE INSURANCE: Why take a contract? What is the taxation?

LIFE INSURANCE: Why take a contract? What is the taxation?


Despite the tumble of life insurance returns subscribed in "Euro Funds", and scholarship trees due to high market instability as well as worldwide, the risks of global conflict and the panic of the "coronavirus pandemic", Life insurance, not to be confused with funeral insurance, remains in 2020 one of the best shelters to place its savings and hope for a few gains, although it is "under certain conditions". What is the taxation of life insurance?
What are the strengths of life insurance? Why take a contract?

Life insurance is a savings product open to all whose purpose is to save to value or obtain a capital to carry out a project or to prepare the transmission of its heritage. It does not guarantee the payment of a capital in the event of death.

The insured can build a savings at his own pace and without constraint, and dispose of his savings as he wishes. If it happens to disappear, capital and acquired gains are transmitted to the person (s) of his choice under very advantageous tax terms (see taxation at death).

Unlike bank booklets (LDDS booklet ...), life insurance is the certainty that:

    payments are not capped upwards;
    The insured knows what he invests because he chooses what he wants to do: "Secure euros", "financial supports in action" S, real estate supports (SCPI), "multi-media contracts", "Pilot management" (or not), etc ...
    It can invest in several media at a time within the same contract without limitation;
    interests are calculated daily, not at the fortnight;
    It is possible to hold as many life insurance contracts as desired;
    If "liquidity", life insurance is not "blocked", since "advances" are possible (capped at 60% of the outstandings) and it is possible to make withdrawals even before 8 years
    It is possible to subscribe alone or with his spouse, as well as for his children or grandchildren.

The "fiscal fate" of life insurance at the end of the contract

Gain taxation, the rule has considerably complex since the 2018 Finance Law, and life insurance taxation is now different depending on the date of the contract, the date and amount of premiums paid.
Withdrawal on a contract under 8 years

The taxation depends on the date on which the premiums and the date on which the "redemption" ("withdrawal" = "redemption") has been operated:

    The withdrawal occurs between 0 and 4 years: it will be the most favorable tax, between the income tax return (interest and capital gains) of the contract, and the discharge at the rate of 35%;

    The withdrawal intervenes between 4 and 8 years: the "choice" will be exercised between the income tax return (interest and capital gains) of the contract, and the liberating levy at the rate of 15%

It should be noted that the option of the bonus applicable to the premiums paid before September 27/2017 may be made "contract per contract", as well as for each withdrawal within the same contract.

On the other hand, the option for reintegrating income in the income applicable to the premiums paid since September 27/2017 is a "global" option.
Withdrawal on a contract of more than 8 years
if open contract and premiums paid before September 26, 1997

Gains made (interest and capital gains) attached to these premiums are totally exempt from tax
if premiums paid from 26 September 1997 until 26 September 2017

Only tax on the few so-called "DSK" contracts (open between 1998 and 2004) are exempt. The others are subject to the following regime:

    annual abatement of € 4,600 for singles and 9,200 € for married or pacified couples;
    Beyond the abatement: lump sum levy of 7.5%

if premiums paid from September 27, 2017

    annual abatement of € 4,600 for singles and 9,200 € for married or pacified couples;
    Beyond the abatement:
    7.5% unparallerary deduction for the fraction of products (interest and capital gains) attached to net premiums paid up to € 150,000
    12.8% non-discharge levy for the fraction of products (interest and capital gains) attached to the net premiums paid beyond € 150,000

Exit in life annuity

Savings is not removed before maturity and option for an exit as a life annuity is taken. The situation differs according to the type of contract signed:
Life insurance contract