Life Insurance

Life insurance remains the preferred investment vehicle for French households, skillfully combining financial security, attractive potential returns, and advantageous tax benefits. As a versatile savings instrument, life insurance adapts to a multitude of personal and family objectives, whether it’s securing your retirement, financing an ambitious real estate project, or planning the transmission of your wealth to future generations.

At Apex Capital, we offer a comprehensive breakdown of life insurance, this essential financial tool that holds a prominent place in the French savings landscape. We guide you through its specifics, helping you understand how to maximize its advantages while aligning your investment strategy with your long-term aspirations.

 

What is a Life Insurance?

Life insurance is a contract between an insurer and a policyholder, where the insurer agrees to pay a capital sum or an annuity to a designated person in case of the insured’s death or at the contract’s maturity. This investment stands out for its remarkable flexibility, offering various investment options: euro funds, which guarantee the invested capital, unit-linked funds, which provide exposure to financial markets, and multi-support contracts, which combine these two types of support.

 

Advantages of Life Insurance

•Tax and inheritance benefits: Life insurance enjoys a privileged tax regime, allowing income tax exemption on gains after eight years, under certain conditions, and offers favorable terms for wealth transfer through tax allowances and reduced taxation on transferred capital.

•Flexibility and potential returns: Life insurance contracts allow customized contributions and partial withdrawals, offering adaptability according to the saver’s needs and objectives. Euro funds guarantee the capital, while unit-linked funds offer higher return potential, albeit exposed to market risks.

 

Disadvantages of life insurance

•Complexity of options: The wide range of choices among different contracts and investment supports can be complex for less experienced savers, often requiring professional advice for informed decision-making.

•Declining returns on euro funds: Although secure, the returns on euro funds tend to decline in the current economic context, potentially affecting the attractiveness of this investment option.

•Tax considerations on withdrawal: While life insurance offers significant tax benefits, the taxation applied to withdrawals can vary and potentially impact the saver’s financial benefit depending on the circumstances.

 

Key statistics on life insurance in France in 2023

•Total assets: Life insurance continues to play a leading role in the French savings landscape, with total assets exceeding €1.7 trillion. This impressive sum underscores the confidence and commitment of the French towards this investment vehicle.

•Performance of euro funds: In 2023, euro funds, known for their security and capital guarantee, recorded average returns around 1.3%. Despite a low-interest-rate environment, they remain a reliable option for cautious investors.

•Potential of unit-linked funds: Unit-linked funds, offering direct exposure to financial markets, presented more diversified return prospects. Their performance, directly linked to market fluctuations, reflects the opportunities and risks associated with more dynamic investments.

 

How to choose your life insurance?

Selecting your life insurance should be a thoughtful process, taking into account your personal aspirations, long-term financial goals, and wealth transfer strategy. Essential criteria such as management fees, offered guarantees, and the diversity and quality of available funds are crucial in this evaluation. At Apex Capital, our expertise is at your service to guide you through these critical choices, ensuring the selection of the contract most in harmony with your specific needs.

 

Investment strategies in life insurance

Life insurance shines for its flexibility, perfectly adjusting to different saver profiles and their diversified objectives through a wide range of investment supports:

•Euro funds: For those prioritizing security, these funds offer a capital guarantee, essential in a savings preservation perspective. Although their returns have seen a downward trend, they remain a preferred option for securing part of your wealth, particularly in times of economic uncertainty.

Unit-linked funds (UC) present a dynamic investment avenue within life insurance, offering direct access to financial markets through various assets such as stocks, bonds, real estate funds, or diversified funds. While these supports offer higher return potential, they also introduce capital fluctuation risk. Crafting an effective investment strategy relies on judicious diversification, balancing the security of euro funds with the growth potential of unit-linked funds, to find the right balance between financial security and performance aspirations.

 

Tax considerations

After eight years of holding (and depending on the total of premiums paid), life insurance benefits from advantageous taxation: gains are subject to a flat tax rate of only 7.5%, after applying an annual allowance of €4,600 for singles and €9,200 for couples. This favorable tax environment makes life insurance an essential tool for building durable wealth, optimizing long-term tax advantages.

 

Life insurance in estate planning

Life insurance also plays a strategic role in estate planning, allowing capital to be bequeathed to beneficiaries with reduced taxation, within the established limits (€152,500 per beneficiary for payments made before the age of 70). This feature makes life insurance a favored vehicle for protecting and transmitting assets to loved ones, while benefiting from lightened taxation.

 

Life insurance and estate planning

Life insurance plays a central role in estate planning. By designating beneficiaries in the contract, the saver can organize the transmission of their wealth according to their wishes, outside the rules of legal devolution. This arrangement allows great flexibility in organizing their succession, potentially favoring a loved one, a third party, or even an association.

 

Example

Let’s take the example of a life insurance policy taken out over eight years ago, with an initial capital of €200,000, allocated 30% in euro funds and 70% in unit-linked funds. If the saver decides to withdraw €20,000 from this contract, thanks to the annual allowance, this withdrawal could be exempt from income tax, except for social contributions applicable only on realized gains.

In the event of death, if payments were made before the age of 70, each designated beneficiary could inherit up to €152,500 without incurring inheritance tax. This example effectively demonstrates the role of life insurance as a privileged instrument for wealth transmission.

 

In conclusion

Life insurance proves to be a versatile and tax-advantaged savings solution, ideal for retirement preparation, protecting loved ones, or accumulating and transmitting wealth. It offers a range of options suited to various investor profiles, highlighting its ability to meet a broad spectrum of financial needs.

To successfully navigate the complex landscape of life insurance and maximize the benefits of your investment, the expertise of Apex Capital is essential. In close collaboration, we will develop a personalized strategy that aligns your life insurance portfolio with your personal and financial ambitions, optimizing your wealth for the future.

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