Life insurance: what is it?

Life insurance: what is it?

Understand what life insurance is to make the right choices, whether you are in Arras or elsewhere.

arras life insurance

Definition of life insurance
Principles and operation of life insurance
How to take out life insurance?
Different types of contracts
Life insurance blog posts
Definition of life insurance

Life insurance is a wise choice for anyone wishing to save in order to have a supplement to retirement or to guarantee more or less large funds to their family in the event of death. Because of its many advantages, life insurance remains one of the most popular financial investments among the French. But even so, there remains a contract that many people wonder about. What should you know about this relatively complex contract?

Life insurance: principle

Contrary to popular belief, life insurance is not only payable when the policyholder dies. Also called a life contract, it allows the base, the subscriber to receive the amount he has saved at the end of the contract. Only, in the event that he dies before the end of the term, the sum he should have received will be paid to the beneficiaries defined at the time of subscription (life death contract). In fact, the life insurance contract is more of a savings contract than a death insurance, strictly speaking. In a death insurance contract, the beneficiary does not receive an annuity or a capital until after the death of the subscriber.

Compared to a traditional savings contract, life insurance has 2 major advantages. On the one hand, it offers the possibility of choosing the beneficiaries of the amount owed to you in the event of death, unlike a normal investment. On the other hand, it is an option that allows you to take advantage of a very attractive tax system. And for good reason, by placing savings in a life insurance contract, we benefit from a partial exemption from taxes from the 8th year. It is for this reason that many wealth management experts recommend this type of investment for an investment lasting at least 8 years.

Taking out life insurance

To subscribe to a life insurance contract, you have to go through 2 stages: the payment of the first contribution and the designation of the beneficiary or beneficiaries. The starting sum can be around 30 euros or more. Subsequently, the subscriber can choose to fund his investment. A life insurance contract is signed for a fixed period during which the funds remain available. But each withdrawal generates financial penalties (see the conditions of the contract). There are contracts that impose a certain period between the payment of the first contribution and the first withdrawal.

Regarding the payment of contributions, you can choose between: by means of a single payment or via programmed premiums (monthly, quarterly, annual) or free. For the choice of beneficiary, you can specify it when subscribing. Otherwise, the capital from the life insurance contract will become part of the insured's estate, if there is death. During his lifetime, the insured can change the beneficiaries (not necessarily direct heirs) and the size of the shares allocated to each of them at any time if there is more than one.

The different types of life insurance contract

There are different types of life insurance contracts:

Single-carrier life insurance contracts

In these types of contracts, the subscriber's capital is invested in a single fund or “medium”. This support can be a fund in euros (low-risk money markets) or a fund invested in units of account (bonds, part of investment companies with variable capital (Sicav), Mutual funds (FCP), shares, etc. ). In a single-support contract, the capital is guaranteed by the insurer (therefore more secure) but the remuneration is often insufficient (3 to 6%). In a unit-linked contract, the return is closely linked to fluctuations in the financial market and there is a greater or lesser risk of partial or total loss of the investment.

For some time, these types of contracts have experienced a certain lack of interest, as they only offer a limited strategic dimension (the placement is therefore not dynamic enough). It is largely for this reason that the legislator created the Fourgous amendment introduced by the so-called Breton law of July 26, 2005 (reorientation of life savings denominated in euros towards unit-linked life insurance contracts or multi-media).

Multi-carrier life insurance contracts

As the name suggests, multi-vehicle life insurance contracts are invested in several vehicles. In the majority of cases, part of the investments will be placed on a euro fund (for security) and another on unit-linked funds