Equity Savings Plan or life insurance contract Which one to choose to diversify your assets?

Equity Savings Plan or life insurance contract Which one to choose to diversify your assets?
The adage that you do not put all your eggs in one basket is a rule to be applied in many areas, including managing financial wealth.

While diversifying your financial assets allows you to better prepare your medium to long-term projects while taking advantage of the present moment, the same is true of having a life insurance contract and a PEA. These envelopes, by their complementarity, can have their place in a heritage. We explain why.
1 - The investment universe: differentiated choices
The Equity Savings Plan (PEA) enables direct investment in European equities or UCIs (1) equities invested in European equity markets.

Life insurance offers the possibility of investing in the support in euros whose capital is guaranteed by the insurer and in a selection of UCIs (1), Also, you can diversify your savings, in life insurance, in real estate via SCPIs, on the bond markets or on the international markets if the contract allows it, which is not possible in a PEA.

Support in euros has no equivalent in an Equity Savings Plan. On the other hand, you have the option of listing all the shares and equity UCIs you wish as long as they comply with PEA eligibility.
2 - Active management or long-term management?
The life insurance contract is primarily intended for long-term savings. In this context, arbitrations between two supports may take effect a few days after your transaction request. To dispose of the funds, you request a surrender of all or part of the contract.

As part of a PEA, the pace of your operations is much less constrained and allows you to intervene in the financial markets with greater responsiveness. When you receive income (interest or dividend) or transfer a security, you receive the funds directly from the associated cash account.

Investors who are looking for greater responsiveness in the financial markets will frequently choose the PEA. As for life insurance, it will remain a privileged investment framework when we have a long-term management strategy (few trade-offs between supports over time).
3 - The ceiling: advantage of life insurance?
You can only have one PEA per taxpayer and the ceiling is limited to € 150,000 or € 225,000 by combining a PEA and a PEA PME-ETI.
In life insurance, there is no limit. Neither in amount nor in number.

Since the Pacte law, young adults aged 18 to 25 attached to a taxpayer's tax household have the possibility of opening a PEA with a maximum payment limit of € 20,000. You can, however, open a life insurance policy for a child, from birth!
 
4 - PEA and Life insurance: savings available at any time
No difference between PEA or life insurance. In both cases, you have your savings at all times and taxation is only triggered at the time of withdrawal (with some exceptions). In addition, it differs depending on the age of the contract or the Plan.

To optimize withdrawal conditions, you have to wait 8 years for a life insurance contract but only 5 years for a PEA. However, an exit before 5 years from the PEA leads, except in special cases, to its closure.
5 - A renewed flexibility for the PEA
The ability to make unrestricted deposits and withdrawals has long been the sole preserve of life insurance contracts. A flexibility that the PEA did not benefit from before the 2018 Pacte law. Indeed, while payments were possible, withdrawals after 8 years no longer allowed the PEA to be funded.

Life insurance allows you to make partial payments and withdrawals regardless of the length of the holding without causing a closing. After 5 years, the PEA becomes as flexible as a life insurance contract, with the exception of the application of a payment limit.
6 - Taxation: towards more convergence
The 2018 finance law implemented a single flat rate of income tax of 12.8% applicable by default to most financial income. To this rate is added that of social security contributions of 17.2%, i.e. an overall tax rate of 30% applicable to interest, dividends and, where applicable, capital gains generated within the framework of a PEA of less of 5 years but also to products resulting from redemptions in a life insurance contract of less than 8 years, and in certain cases of more than 8 years, when these products are attached to premiums paid since September 27, 2017.
Note that taxpayers can nevertheless opt instead of the single flat rate of 12.8%, for the application of the progressive scale of income tax if this is more advantageous (note, this option is global