Taking out a life insurance contract
Contract length
Life insurance contracts have no legal term. In practice, we advise you to freely set a fixed period which will be extended by tacit agreement from year to year unless you make a denunciation. You also have the possibility of choosing a lifetime duration according to the contracts.
Invest within the contract
It is possible to invest in a life insurance contract in 3 forms:
The initial payment: It corresponds to the payment you make when you take out the contract. It can be issued by check, wire transfer or direct debit (depending on the life insurance company).
Free additional payments: you invest money in your life insurance contract whenever you want
Scheduled additional payments: You define an amount and a frequency which can be monthly, quarterly, semi-annually or annually to invest in your best life insurance contract. Payments are automatically withdrawn by the insurer from your account. You can stop these payments at any time or change the frequency and amount without tax implications for the contract.
Please note: there is no obligation in the additional payments. The subscriber can if he wishes to pay only one single premium (initial payment).
The costs of the life insurance contract
There are several categories of costs:
Entrance fees and fees deducted from each payment: these fees can vary from 0% to 5% depending on the contract.
Management fees: they correspond to the remuneration of the insurer. They are calculated on the total savings made. It takes on average between 0.5% and 1.5% for unit-linked contracts. A distinction is made between management fees on the euro fund of the life insurance company and management fees on unit-linked support.
Arbitrage fees: fees are deducted from the amount of sums transferred from one fund to another. In some contracts, these fees can reach 1% of the sums arbitrated.
Savings Evolution 2: Life insurance awarded by the press
Management of the life insurance contract
There are several management methods offered by life insurance companies:
Free management:
You divide your savings yourself between the various supports available in the life insurance contract according to your investor profile, your profitability objectives and your level of risk. You manage your life insurance contract with complete freedom and remain in control of your asset allocation.
Managed management:
You give a mandate to your broker or a management company to manage your contract for you.
Management under mandate:
You do not yourself choose the media that will compose your life insurance contract. You delegate the management of the life insurance contract to a management company approved by the life insurance company. After defining your risk profile, the portfolio managers will select, depending on market opportunities, the investment vehicles best suited to your management orientation.
Get the money back on his contract
As we have already said in this guide, the sums placed in a life insurance contract are never blocked and at any time you can withdraw money. This withdrawal can take several forms:
Partial (free) redemption
At any time you can make partial withdrawals or redemptions. If the beneficiary has accepted his designation since December 18, 2007, partial redemptions (and advances) can only be made with his agreement. Upon receipt of the redemption request, the insurer has two months to pay the funds. After this period, the sums are productive of interest. During the partial redemption, you must stipulate the tax option either the lump-sum withholding tax or income tax.
Concretely, you send a partial redemption form to E-Patrimoine or you make this redemption online.
To find out the best option, see the life insurance tax page
Scheduled partial redemptions
The life insurance investment offers the subscriber the possibility of scheduling partial surrenders in order, for example, to build up regular income for his retirement. Usually a minimum amount is required on the contract. The frequency and amount meet the same rules as for free partial redemption.
Advance
An advance is a loan that the life insurance company gives you, for interest. Faced with a one-time need for money, it may be better to request an advance rather than make a partial repurchase. An advance is not taxable and does not reduce the value of the contract. Its real cost is not very important because the subscriber leaves his money on the contract which continues to produce
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