Everyone wants to protect their family, especially their spouse and children. This is why, when we reach a certain age, we are interested in savings products aimed at securing the financial future of our half and / or our offspring. Often, the French turn to life insurance. A reflex that is easily explained in view of the advantages of life insurance. However, other insurance policies exist to protect their loved ones. If the French have less recourse to it, they have every interest in looking into temporary death insurance. This product may indeed be more suitable than life insurance. It must be said that the operation of temporary death insurance is very different. This is not about accumulating savings that can be recovered by the subscriber or paid to beneficiaries. It works more like insurance and has the particularity, as the name suggests, of being temporary. To fully understand this insurance, before deriving the benefits, you should know that this guarantee is generally contracted for a period of one or five years with the possibility of renewal. The subscriber pays contributions, and if he dies while the contract is still valid, the beneficiaries he has designated may be granted a capital or an annuity. If, at the end of the contract, the subscriber is still alive, the contributions will be kept by the insurer without compensation.
Serenity
The first advantage of temporary death insurance: the financial shelter of the designated beneficiaries. While building up protection for your family is often very expensive, this is not necessarily the case here. Some indeed save on life insurance or other banking products. Others invest in real estate. But the sums involved must be large and generally capitalized over many years. By subscribing to this type of insurance, you contribute as you go, but in the event of a fatal accident even a few days after enrollment, the persons designated will be able to benefit from a capital or an annuity. Ideal therefore to ensure the financial security of his or her husband or wife, or even the studies of their children, for example. Be careful, however, a death by suicide or following the taking of drugs or the practice of an extreme sport will not trigger the payment of the capital.
Flexibility
Flexibility because term death insurance can pursue several objectives. As we have mentioned, it may simply be a question of ensuring the standard of living of those close to them. But sometimes, the use of this insurance is requested as part of a mortgage. The financing organization sometimes asks for a borrower guarantee. In addition, a company can also take out death insurance for one of its directors if it considers that his premature death could weaken the commercial company.
Flexibility then because the term death insurance is personalized. The member of course chooses the beneficiary (ies) of the contract, but he also determines the amount of the premium that will be paid in the event of death during the term of the contract and, precisely, the expiry date of the insurance. In addition, the insured can pay contributions as they see fit, more or less regularly.
Finally, flexibility because the beneficiaries will also have a choice to make if the insured dies during the term of the contract. They will be able to request a full payment of the capital or demand the payment of annuities.
Taxation
While in theory the premium for term life insurance may be taxable, in fact, few beneficiaries have to pay a tax when they receive a payment from this insurance. First, when the beneficiary is the spouse, married or in a civil partnership, he or she benefits from total exemption. And for all the other beneficiaries, there is an allowance which varies according to the age of the insured when the premiums are paid. Before age 70, it reaches 152,500 euros per beneficiary. As a result, they are often exempt from tax. If the amount received exceeds this threshold, the debit rate is 25%, or even 31.25% if the capital exceeds 700,000 euros. Concerning the premiums paid after 70 years, they integrate the inheritance and the allowance is reduced to 30,500 euros. These exemptions and allowances therefore allow most beneficiaries of temporary death insurance not to pay tax. For the insured, this therefore represents a good means of indirectly passing on their assets without being taxed. And few inheritance products offer such a tax exemption mechanism.
(By the editorial staff of the agency hREF)
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