Life Insurance: Explanation| Payday Loans

May 10, 2019 / admin / 0 Comments

The essential

Life insurance is a flexible savings product, which allows for a wide range of investments without constraints.
Life insurance allows tax benefits to be realized on the gains realized.
It is also a succession tool, flexible and fiscally advantageous.

Life insurance: a flexible savings product

Life insurance is a savings product that allows you to make various investments and thus increase your capital. It is therefore not necessary to confuse life and death insurance, the latter being a provident product.

The life insurance allows you to save without constraint, because contrary to the received ideas, your capital is not blocked there. You can pay your savings (we are talking about premium payments) or withdraw a portion of it when you want (we are talking about redemptions). In addition, life insurance is a very advantageous savings product in terms of taxation. Of course, you can recover the savings at any time, but saving for at least eight years will save you money, at least in part. This makes life insurance an ideal savings product in the medium or long term. You can subscribe to one or more life insurance policies, and you can also open a contract on behalf of a third party. When you open the life insurance, you make a down payment, then you can make payments, punctual or regular, if you wish.

Invest with life insurance

With life insurance, your money is invested:

in one or more funds in euros, with guaranteed capital (you are thus guaranteed to recover the amount you initially invested);
and / or in units of account, which can be various media such as equity and bond funds (SICAV or FCP), real estate funds (SCPI or OPCI), or structured products.

The breakdown between euro funds and units of account depends on the risk you want to take. Life insurance is suitable for all investor profiles: you can be cautious or very dynamic. Factors that should enable you to measure risk taking are:

your financial and family situation (we are talking about risk capacity);
your appetite for risk (related to your desire for performance);
your investment horizon, which depends on your financial plans and their deadlines. The farther away they are, the more risk you can take ( learn more about investing by objectives ).

The choice of investment media is not necessarily easy. Fortunately, there are several modes of management, to choose according to your financial knowledge: free management, management recommended, or management under mandate.

When you opt for free management, you choose your own units of account; this requires a good financial culture.
When you opt for a discretionary management, you delegate the management of your savings to a financial professional. The latter will then deal with distribution and arbitration decisions (ie reinvest some of the savings in another medium) between the different media. He will select the best media for you.
In the advised management, you are assisted by a counselor, but the final decision belongs to you.

Expenses on a life insurance

The total costs of a life insurance can be broken down as follows:

the administrative management fees of the insurer, collected monthly or quarterly;
the expenses of mandate, within the framework of a controlled management;
entrance fees, levied at each payment;
arbitration fees (levied when you change your allocation);
as part of a mandate, performance fees may also be charged;
Finally, we must not forget the management fees specific to investment vehicles (SICAV, FCP and SCPI), which are rarely explained and benefit your bank, your broker or your advisor, through retrocessions.

As they accumulate, costs can greatly reduce the performance of the investments made. We advise you to be vigilant on all costs. In this case, you should never buy life insurance with entrance fees.

What are the advantages ?

Performance

Life insurance is one of the most profitable savings products in terms of returns: the annual rates of Livret A and LDD do not exceed 0,75% (2015), the average yield of the funds in euros, as for it amounts to 2.3% (net of management fees, in 2015). Most importantly, the performance of life insurance can come from a judicious choice of units of account or dynamic investment vehicles. For example, over the last five years, European bonds yielded 24%, European equities 41.79%, and US equities 124% (note however, past performance is no guarantee of future performance and these investments are risky. loss of capital).

tax system

Life insurance gives you the benefit of tax advantages, both on interest earned and death duties; it is one of the least taxed investments in France. According to the age of the contract:

In the first four years following the subscription: the levy on withdrawn earnings is relatively high at 35%.
Between the fourth and eighth year of your contract: this levy increases to 15%. You can, however, opt to add earnings to your taxable income for each withdrawal you make; you will then win if your marginal tax bracket is less than the flat rate.
After eight years of retention: when you make a redemption, that is to say when you withdraw your money, partially or totally, you benefit from an advantageous taxation. It is wise to keep your policy for more than eight years before you buy back. You benefit from an abatement of € 4,600 if you are single, or € 9,200 if you are married or pacsé – the part of gains above these amounts being taxed at 7,5%. In other words, if you make a withdrawal, then you will not pay taxes on the amount originally paid, nor on the earnings, provided that these gains are less than € 4,600 (or € 9,200 if you are married or pacsé).

Another tax benefit of the insurance is that it is not part of the estate of the insured – except in the case where no beneficiary is designated. Life insurance is thus more advantageous in terms of taxation, because your estate you benefit from a 50% discount greater than the reduction of a conventional estate. The deduction taken into account with life insurance is € 152,500 per beneficiary, for amounts invested before the age of 70. In addition, the tax rates are lower: in a traditional succession, the tax rate can go up to 45%, while that of life insurance is capped at 31.25%.

When you buy life insurance, you must complete a beneficiary clause, where you choose life beneficiaries (usually yourself), and beneficiaries in the event of death. The latter will receive the remaining capital on your contract during your succession. This beneficiary clause must absolutely be fulfilled, otherwise the capital would lose any tax and civil benefit. You are also free to designate one or more persons, equally or unequally, within your family or not. You can specify multiple ranks of beneficiaries: if the first one is no longer alive, the second will be profitable.

Life insurance with Nalo

When you invest with Nalo, your savings are placed in mandated life insurance. We recommend a tailor-made investment portfolio, and we take care of making it work for you. Our management is adapted to your projects and objectives, in line with your heritage environment (income, real estate, financial wealth).

Thanks to our financial planning technology , you can simultaneously organize your various financial projects. For example, you can prepare for retirement, save for your children’s education, or simply seek to strengthen your wealth at the same time on a single life insurance policy. For each of your projects, you define a time horizon and a goal, and we make the right investments, your investment.

Unlike other life insurance, Nalo is based on index funds , also known as trackers or ETFs (for exchange traded funds). These funds replicate a stock market index. Their fees are considerably lower than the SICAV or the FCP, which allows to preserve the performance. By investing in dozens, if not hundreds of companies, ETFs offer you optimal diversification, which helps reduce risk while maintaining a significant return.

With Nalo, you also benefit from reduced fees : no entrance fees, no arbitration fees or fees. Life insurance administrative expenses are 0.85% / year, ETF management fees are 0.55% / year, plus an average of 0.25% charged by the management companies. The use of low-cost ETFs and the automation of low value-added tasks now allow us to offer a better quality service, almost half as expensive as the offers on the market .