Life insurance and death insurance, not the same fight Very often, even too often, in articles, movies, or even during a dinner with friends, we consider life insurance as death insurance… Wrong!!! Life insurance and death insurance are two different products, each with a specific purpose and function. By definition, a life insurance contract is a financial investment fed by payments that are then housed in a specific and advantageous tax envelope. It is in no way a non-repayable insurance policy like death insurance. The latter allows, only in case of death of the insured before the end of the contract, the payment of a predetermined capital to one or several beneficiaries. In the case of life insurance, the subscriber can make partial or total withdrawals whenever he or she wishes. And at the death of the insured, the capital is transmitted to the beneficiaries of his choice previously designated in the beneficiary clause. When you love… you don’t count Unlike the Livret A or the PEA, you are not obliged to hold a single life insurance contract. You can subscribe to as many as you want! There are no numerical constraints. It is even a good idea to have several contracts with different insurers, as this strategy allows you to diversify your risks. However, be reasonable, the more contracts you have, the more time it will take to manage and monitor your investments… Keep your money warm! When you subscribe to an internet contract or when you feed it afterwards, you can do it by means of an online payment (it is simpler and faster). But you can also write a check and send it to the broker… But who collects your money? This is a question that often comes up, and rightly so… Well, it’s actually the insurer of your policy that will cash your online payments and your checks (even though they are sent to your broker). Let’s take an example: At Assurancevie.com, you open an Evolution Life contract, insured by Aviva Life. Your initial payment of €1,000 is made in the form of a cheque. The cheque is made out to Aviva Vie, but it must be sent, along with your application file, to Assurancevie.com’s head office. The broker will check your application and make sure that no documents are missing. If this is the case, your application will be validated and your check will be debited by Aviva Vie. Your money is therefore with the insurer (which is a guarantee of security) who will then invest it, as you wish, in the euro fund and/or the units of account. Physical network contracts, internet contracts: equal play in terms of guarantees! Whether you open a life insurance contract through a banker, a general agent or a broker, your money is with the insurer of the contract so that he invests it on the fund in euros and/or the units of account, in the proportions that you have determined. Therefore, the guarantees (in case of bankruptcy of the insurer) are the same whatever the distribution channel. As a result, the guarantees (in case of bankruptcy of the insurer) are the same regardless of the distribution channel. Let’s take an example: Mr X has opened a contract with a Generali agent (physical network). As for Mr. Y, he subscribed to a Puissance Sélection contract, insured by Generali (internet network), through the broker Assurancevie.com. Despite the different subscription methods, Mr X and Mr Y have the same guarantees and both benefit from the solidity of their common insurer, namely Generali. The units of account, as if it was raining By opening a life insurance contract on the Internet, you can access, with a few hundred euros, a wide, diversified and multi-manager financial offer (open architecture). In other words, you can invest in various units of account (equity funds, bond funds, asset funds, trackers, SCPI, OPCI…) managed by various renowned management companies (Edmond de Rothschild, Carmignac, La Financière de l’Échiquier, Amundi…). This way, you have all the chances on your side to optimize the financial management of your contract. Know that within the physical networks, a rich and quality offer of units of account is very often accessible only if the saver pays a big check. Minors accepted!… Just like the Livret A, a child can very well hold a life insurance contract. In this context, the signature of the legal representative(s) is necessary for the opening. And that of the child if he/she is over 12 years old. The beneficiary clause is then framed and written as follows: “My heirs”. … And the over 70s too! “There is no point in opening a contract after the age of 70″… This prejudice is often put forward. And for good reason, the tax rules for capital passed on in the event of death before the age of 70 are very flexible (deduction of €152,500 per beneficiary). But life insurance is still interesting after 70. In this case, if the amount of premiums paid is less than €30,500, the capital passed on is fully exempt. Beyond that, the premiums are subject to inheritance tax (depending on the relationship between the insured and the beneficiary). The capitalized interest is therefore totally exempt. And the €30,500 allowance is not used up by the exempt beneficiaries. For more convenience, it is advisable to open a new contract after 70 years old, rather than making additional payments after this age on an existing contract and “mixing” the sums paid before/after 70 years old (and “mixing” the tax provisions). Failed transfer operation The PEA can be transferred from one establishment to another (while keeping the tax priority), the PERP can be transferred… The Madelin contract too! But not the life insurance! For example, it is not possible to transfer your existing Allianz contract to a contract distributed by Assurancevie.com and insured by Suravenir, while keeping the original tax status… What to do if you are not happy with your current contract? You can close it and open another one. But beware of the consequences of this operation! If you can make withdrawals whenever you want (the money invested in life insurance is in no way blocked), the gains (capital gains) may be taxed according to the age of your contract. Before closing it to open another one, check if you are in capital gains and the date you subscribed. If not, you always have the possibility of keeping your old contract, of not contributing to it (in the context of life insurance, payments are not compulsory) and of opening a contract (with lower fees and higher returns) in the structure of your choice. A beneficiary clause can be erased! The beneficiary clause is not indelible!!! Essential to ensure that the allocation of the contract’s funds is in line with the subscriber’s wishes, its wording can very well be modified at any time by the insured (except in the presence of an accepting beneficiary). It is even recommended to review it from time to time and adjust it if necessary, depending in particular on the family configuration. Shield against capital losses! Investing in units of account allows you to diversify your life insurance contract and to get a higher performance than the euro fund… But this implies taking risks and therefore seeing your financial investments, which are not guaranteed in capital, fluctuate. However, you should know that there are ways to avoid being in the red (e.g. management options) but also guarantees to give as much as possible to your loved ones in the event of your death (e.g. the floor guarantee). Among the interesting management options (also called automatic arbitration options) there is the securing of capital losses and the stop loss. The securing of capital losses: Thanks to this management option, the unrealized capital gain noted on a unit of account is arbitrated in favor of the euro fund as soon as it reaches a predefined threshold. The absolute stop loss: This option allows to arbitrate in favor of the fund in euros the totality of a support in unit of account as soon as it passes under a predefined threshold compared to the initial investment. For example: within her life insurance contract, Celia invests a share in units of account for an amount of €5,000. She knows that these funds carry a risk of capital loss. She accepts this risk but wishes to limit it. With the capital loss limitation option, she sets a threshold of 10%. If these units of account lose value, they will be arbitrated in full in favour of the euro fund as soon as the value of €4,500 is reached. Relative stop loss: With this option, an automatic arbitration of the entirety of a unit of account line is triggered when a capital loss threshold is reached, not in relation to the initial value of the investment but in relation to the highest level reached by the fund. All these options are usually free of charge in the internet contracts.