There are many reasons why life insurance is an attractive investment. This financial product offers many advantages to investors. One of the main advantages is the ability to take advantage of beneficial taxes.
Life insurance: a financial product only available in France
Life insurance has been a preferred investment for savers for over 40 years. With an outstanding amount of close to 1,880 billion euros (three-quarters of the wealth generated by the state in one year), this tax envelope, which does not exist anywhere outside France, is very attractive.
Life insurance is essential for anyone who wants to make a fortune. Contrary to popular belief, it is not just an investment to protect loved ones, but aims above all to benefit the joint during his life, according to the legislator.
Investments in currencies such as the euro, bonds, and real estate are protected when you take out life insurance. In addition, life insurance can be obtained in the form of units of account, or UC, and this allows people to invest in almost any broker.
A multiple support contract provides many different assets to support it. These options include money in euros, which is still there for a significant portion of the contracts. In addition, these contracts provide dozens or even hundreds of accounts.
A securities account allows investors to hold investments in bonds, real estate, and any other non-traded securities. Additionally, some investment accounts may support equity investments.
Insurance companies offer an advantage to those who have a good contract. They provide an extra layer of protection to their clients with the ability to lend their money. In fact, they provide a temporary source of liquidity to their clients. Clients only have to request an advance on their capital from the insurance company. They can then use the tax-free funds without withdrawing from the account. In fact, they benefit from a loan at an annual interest rate of 1.5%.
You can offer to take out a life insurance pledge or authorization instead of getting life insurance. It’s free with some insurance companies, although it may be more expensive than buying life insurance because of your age. If you borrow money from a bank, you can also ask for a guarantee from the bank. This can be considered as an alternative to borrower’s insurance if the cost is too high.
Less profitable investment than before
When it comes to taxes, life insurance is especially helpful. Most contracts are tax-exempt after 8 years of activity. Life insurance is attractive because of the taxes associated with contract renewal. Each year, upon renewal, 4,600 euros are reduced (9,200 if the insured is married or in a civil partnership), only social contributions remain.
Today’s yields do not match yesterday’s returns and are nowhere near as high as inflation, which is rising at more than 5% annually. Risk-free savings no longer allow you to conserve your purchasing power. If in 2000 we were hoping for an average return of 5.3%, it was 1.3% in 2021.
Nevertheless, life insurance continues to attract the savings of the French, who invest more than 10 billion euros per month. The 1.880 billion euros invested represented two-thirds of the country’s debt (2,800 billion euros) at the end of 2021 while “only” 135 billion was invested there in 2021.
Finally, it should be noted that life insurance is the only financial means that allows the transfer of capital without going through inheritance. Thus, the amounts transferred are not taxable within 152,500 euros per beneficiary. Therefore, life insurance is essential for individuals who have large assets.