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Life insurance is the preferred investment of the French. How to choose it well?
An evolving financial investment
A life insurance contract is a financial investment that can accommodate a large number of instruments. It is therefore necessary to choose the financial supports in which one wishes to invest: shares, bonds, UCITS… Each presents a variable degree of exposure to the risk of capital loss. We must therefore determine whether we prefer to favor a safe investment or favor risk-taking. For example, an equity investment will be subject to the vagaries of the financial markets and you may earn more or lose more. The choice of investment to be made must therefore depend on the saver’s temperament in the face of risk taking, but also on objective criteria: income, composition of assets, age, destination of the savings, etc. For example, if this investment is intended for a supplementary pension,
Transfer of assets
The life insurance contract is also a means of transferring one’s assets under tax-efficient conditions. It is therefore necessary to choose the beneficiary carefully because he will be the sole beneficiary of the funds on the death of the subscriber. Indeed, the life insurance contract is not the subject of a recovery in the assets and escapes, in principle, the rules of sharing of common law. This can therefore have the effect of favoring one heir over another. However, it is quite possible to indicate several beneficiaries for the same life insurance contract.
The duration of the internship
The duration of the internship is subject to a tax constraint: the tax advantage which is granted by the State is acquired partially after 5 years and in full after 8 years. You must therefore be prepared to tie up your funds for 8 years. It is always possible to unlock your life insurance before term but, in this case, you will lose the tax advantage. In the event of an investment of less than 8 years, the saver therefore has every interest in favoring another investment vehicle. Banks, insurance companies or independent financial advisers generally offer more attractive pricing conditions when the saver extends the duration of the planned investment.
Trading fees
Banks, insurance companies and independent financial advisers always have a margin of negotiation. Do not hesitate to negotiate with them the entry fees, custody fees and other management fees. The higher the investment, the more the financial institution is willing to give an additional discount. Also be aware that banks and insurers may apply higher rates if you are already a customer. It is therefore always interesting to compare the offers. You can also turn to an independent financial adviser who can offer you similar funds.
DAMY law firm , Nice, Life insurance, Update 2022.
